Correlation Between Itau Fundo and XP Selection

Can any of the company-specific risk be diversified away by investing in both Itau Fundo and XP Selection 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 Itau Fundo and XP Selection into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Itau Fundo De and XP Selection Fundo, you can compare the effects of market volatilities on Itau Fundo and XP Selection 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 Itau Fundo with a short position of XP Selection. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itau Fundo and XP Selection.

Diversification Opportunities for Itau Fundo and XP Selection

-0.16

Correlation Coefficient

Itau Fundo  XP Selection

Good diversification

The 3 months correlation between Itau and XPSF11 is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Itau Fundo De and XP Selection Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XP Selection Fundo and Itau Fundo 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 Itau Fundo De are associated (or correlated) with XP Selection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XP Selection Fundo has no effect on the direction of Itau Fundo i.e., Itau Fundo and XP Selection go up and down completely randomly.

Pair Corralation between Itau Fundo and XP Selection

Assuming the 90 days trading horizon Itau Fundo De is expected to generate 0.85 times more return on investment than XP Selection. However, Itau Fundo De is 1.17 times less risky than XP Selection. It trades about 0.1 of its potential returns per unit of risk. XP Selection Fundo is currently generating about 0.01 per unit of risk. If you would invest  9,412  in Itau Fundo De on April 25, 2025 and sell it today you would earn a total of  415.00  from holding Itau Fundo De or generate 4.41% return on investment over 90 days.

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

Itau Fundo De  vs.  XP Selection Fundo

Itau Fundo De

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Itau Fundo De are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Itau Fundo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

XP Selection Fundo

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in XP Selection Fundo are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, XP Selection is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Itau Fundo and XP Selection

The main advantage of trading using opposite Itau Fundo and XP Selection positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itau Fundo position performs unexpectedly, XP Selection 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 XP Selection will offset losses from the drop in XP Selection's long position.

The idea behind Itau Fundo De and XP Selection Fundo 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.