Correlation Between B3 SA and Moodys
Can any of the company-specific risk be diversified away by investing in both B3 SA and Moodys 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 B3 SA and Moodys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between B3 SA and Moodys, you can compare the effects of market volatilities on B3 SA and Moodys 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 B3 SA with a short position of Moodys. Check out your portfolio center. Please also check ongoing floating volatility patterns of B3 SA and Moodys.
Diversification Opportunities for B3 SA and Moodys
Good diversification
The 3 months correlation between B3SA3 and Moodys is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding B3 SA and Moodys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moodys and B3 SA 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 B3 SA are associated (or correlated) with Moodys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moodys has no effect on the direction of B3 SA i.e., B3 SA and Moodys go up and down completely randomly.
Pair Corralation between B3 SA and Moodys
If you would invest (100.00) in Moodys on September 4, 2024 and sell it today you would earn a total of 100.00 from holding Moodys or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
B3 SA vs. Moodys
Performance |
| Timeline |
| B3 SA |
| Moodys |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
B3 SA and Moodys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with B3 SA and Moodys
The main advantage of trading using opposite B3 SA and Moodys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B3 SA position performs unexpectedly, Moodys 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 Moodys will offset losses from the drop in Moodys' long position.The idea behind B3 SA and Moodys 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.Check out your portfolio center.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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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