Correlation Between VF and Guararapes Confeces

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

By analyzing existing cross correlation between VF Corporation and Guararapes Confeces SA, you can compare the effects of market volatilities on VF and Guararapes Confeces 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 VF with a short position of Guararapes Confeces. Check out your portfolio center. Please also check ongoing floating volatility patterns of VF and Guararapes Confeces.

Diversification Opportunities for VF and Guararapes Confeces

-0.06

Correlation Coefficient

VF  Guararapes Confeces

Good diversification

The 3 months correlation between VF and Guararapes is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding VF Corp. and Guararapes Confeces SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guararapes Confeces and VF 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 VF Corporation are associated (or correlated) with Guararapes Confeces. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guararapes Confeces has no effect on the direction of VF i.e., VF and Guararapes Confeces go up and down completely randomly.

Pair Corralation between VF and Guararapes Confeces

Assuming the 90 days trading horizon VF Corporation is expected to generate 1.37 times more return on investment than Guararapes Confeces. However, VF is 1.37 times more volatile than Guararapes Confeces SA. It trades about 0.04 of its potential returns per unit of risk. Guararapes Confeces SA is currently generating about 0.0 per unit of risk. If you would invest  3,209  in VF Corporation on April 24, 2025 and sell it today you would earn a total of  175.00  from holding VF Corporation or generate 5.45% return on investment over 90 days.

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

VF Corp.  vs.  Guararapes Confeces SA

VF Corporation

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VF Corporation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, VF may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Guararapes Confeces

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guararapes Confeces SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Guararapes Confeces is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with VF and Guararapes Confeces

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

The idea behind VF Corporation and Guararapes Confeces SA 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.