Correlation Between Fator IFIX and Wetzel SA

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

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

Diversification Opportunities for Fator IFIX and Wetzel SA

-0.12

Correlation Coefficient

Fator IFIX  Wetzel SA

Good diversification

The 3 months correlation between Fator and Wetzel is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Fator IFIX Fundo and Wetzel SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wetzel SA and Fator IFIX 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 Fator IFIX Fundo are associated (or correlated) with Wetzel SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wetzel SA has no effect on the direction of Fator IFIX i.e., Fator IFIX and Wetzel SA go up and down completely randomly.

Pair Corralation between Fator IFIX and Wetzel SA

Assuming the 90 days trading horizon Fator IFIX Fundo is expected to generate 0.37 times more return on investment than Wetzel SA. However, Fator IFIX Fundo is 2.69 times less risky than Wetzel SA. It trades about -0.13 of its potential returns per unit of risk. Wetzel SA is currently generating about -0.34 per unit of risk. If you would invest  6,237  in Fator IFIX Fundo on February 7, 2024 and sell it today you would lose (103.00) from holding Fator IFIX Fundo or give up 1.65% of portfolio value over 90 days.

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

Fator IFIX Fundo  vs.  Wetzel SA

Fator IFIX Fundo

Risk-Adjusted Performance

1 of 100

Weak

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

Wetzel SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wetzel SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Preferred Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Fator IFIX and Wetzel SA

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

The idea behind Fator IFIX Fundo and Wetzel 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.