Correlation Between Fundo De and Visa

Can any of the company-specific risk be diversified away by investing in both Fundo De and Visa at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fundo De and Visa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fundo de Investimento and Visa Inc, you can compare the effects of market volatilities on Fundo De and Visa and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fundo De with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundo De and Visa.

Diversification Opportunities for Fundo De and Visa

-0.11

Correlation Coefficient

Fundo De  Visa

Good diversification

The 3 months correlation between Fundo and Visa is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Fundo de Investimento and Visa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Inc and Fundo De is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fundo de Investimento are associated (or correlated) with Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Inc has no effect on the direction of Fundo De i.e., Fundo De and Visa go up and down completely randomly.

Pair Corralation between Fundo De and Visa

Assuming the 90 days trading horizon Fundo de Investimento is expected to under-perform the Visa. But the fund apears to be less risky and, when comparing its historical volatility, Fundo de Investimento is 1.48 times less risky than Visa. The fund trades about -0.05 of its potential returns per unit of risk. The Visa Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5,932  in Visa Inc on February 5, 2024 and sell it today you would earn a total of  886.00  from holding Visa Inc or generate 14.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fundo de Investimento  vs.  Visa Inc

Fundo de Investimento

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundo de Investimento has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Fundo De is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Visa Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Visa Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Visa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fundo De and Visa

The main advantage of trading using opposite Fundo De and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundo De position performs unexpectedly, Visa can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Visa will offset losses from the drop in Visa's long position.

The idea behind Fundo de Investimento and Visa Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.