Correlation Between Real Estate and FUNDO DE

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

By analyzing existing cross correlation between Real Estate Investment and FUNDO DE INVESTIMENTO, you can compare the effects of market volatilities on Real Estate and FUNDO DE 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 Real Estate with a short position of FUNDO DE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Estate and FUNDO DE.

Diversification Opportunities for Real Estate and FUNDO DE

0.39

Correlation Coefficient

Real Estate  FUNDO DE

Weak diversification

The 3 months correlation between Real and FUNDO is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Real Estate Investment and FUNDO DE INVESTIMENTO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUNDO DE INVESTIMENTO and Real Estate 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 Real Estate Investment are associated (or correlated) with FUNDO DE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUNDO DE INVESTIMENTO has no effect on the direction of Real Estate i.e., Real Estate and FUNDO DE go up and down completely randomly.

Pair Corralation between Real Estate and FUNDO DE

Assuming the 90 days trading horizon Real Estate is expected to generate 3.26 times less return on investment than FUNDO DE. But when comparing it to its historical volatility, Real Estate Investment is 1.35 times less risky than FUNDO DE. It trades about 0.02 of its potential returns per unit of risk. FUNDO DE INVESTIMENTO is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  952.00  in FUNDO DE INVESTIMENTO on March 14, 2024 and sell it today you would earn a total of  26.00  from holding FUNDO DE INVESTIMENTO or generate 2.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Real Estate Investment  vs.  FUNDO DE INVESTIMENTO

Real Estate Investment

Risk-Adjusted Performance

1 of 100

Weak

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

FUNDO DE INVESTIMENTO

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FUNDO DE INVESTIMENTO are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Real Estate and FUNDO DE

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

The idea behind Real Estate Investment and FUNDO DE INVESTIMENTO 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.