Correlation Between NAVI CRDITO and Loft II

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

By analyzing existing cross correlation between NAVI CRDITO IMOBILIRIO and Loft II Fundo, you can compare the effects of market volatilities on NAVI CRDITO and Loft II 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 NAVI CRDITO with a short position of Loft II. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAVI CRDITO and Loft II.

Diversification Opportunities for NAVI CRDITO and Loft II

0.07

Correlation Coefficient

NAVI CRDITO  Loft II

Significant diversification

The 3 months correlation between NAVI and Loft is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding NAVI CRDITO IMOBILIRIO and Loft II Fundo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loft II Fundo and NAVI CRDITO 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 NAVI CRDITO IMOBILIRIO are associated (or correlated) with Loft II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loft II Fundo has no effect on the direction of NAVI CRDITO i.e., NAVI CRDITO and Loft II go up and down completely randomly.

Pair Corralation between NAVI CRDITO and Loft II

Assuming the 90 days trading horizon NAVI CRDITO IMOBILIRIO is expected to generate 0.46 times more return on investment than Loft II. However, NAVI CRDITO IMOBILIRIO is 2.18 times less risky than Loft II. It trades about -0.03 of its potential returns per unit of risk. Loft II Fundo is currently generating about -0.1 per unit of risk. If you would invest  880.00  in NAVI CRDITO IMOBILIRIO on August 31, 2024 and sell it today you would lose (54.00) from holding NAVI CRDITO IMOBILIRIO or give up 6.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

NAVI CRDITO IMOBILIRIO  vs.  Loft II Fundo

NAVI CRDITO IMOBILIRIO

Risk-Adjusted Performance

0 of 100

Very Weak

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

Loft II Fundo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loft II Fundo has generated negative risk-adjusted returns adding no value to fund investors. Despite weak performance in the last few months, the Fund's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with NAVI CRDITO and Loft II

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

The idea behind NAVI CRDITO IMOBILIRIO and Loft II 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.