Correlation Between BRF SA and Cyrela Brazil
Can any of the company-specific risk be diversified away by investing in both BRF SA and Cyrela Brazil 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 BRF SA and Cyrela Brazil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRF SA and Cyrela Brazil Realty, you can compare the effects of market volatilities on BRF SA and Cyrela Brazil 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 BRF SA with a short position of Cyrela Brazil. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRF SA and Cyrela Brazil.
Diversification Opportunities for BRF SA and Cyrela Brazil
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BRF and Cyrela is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding BRF SA and Cyrela Brazil Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cyrela Brazil Realty and BRF 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 BRF SA are associated (or correlated) with Cyrela Brazil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cyrela Brazil Realty has no effect on the direction of BRF SA i.e., BRF SA and Cyrela Brazil go up and down completely randomly.
Pair Corralation between BRF SA and Cyrela Brazil
Assuming the 90 days trading horizon BRF SA is expected to generate 1.19 times more return on investment than Cyrela Brazil. However, BRF SA is 1.19 times more volatile than Cyrela Brazil Realty. It trades about 0.05 of its potential returns per unit of risk. Cyrela Brazil Realty is currently generating about -0.1 per unit of risk. If you would invest 2,494 in BRF SA on August 30, 2024 and sell it today you would earn a total of 51.00 from holding BRF SA or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRF SA vs. Cyrela Brazil Realty
Performance |
| Timeline |
| BRF SA |
| Cyrela Brazil Realty |
BRF SA and Cyrela Brazil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRF SA and Cyrela Brazil
The main advantage of trading using opposite BRF SA and Cyrela Brazil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRF SA position performs unexpectedly, Cyrela Brazil 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 Cyrela Brazil will offset losses from the drop in Cyrela Brazil's long position.The idea behind BRF SA and Cyrela Brazil Realty 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.| Cyrela Brazil vs. MRV Engenharia e | Cyrela Brazil vs. Gafisa SA | Cyrela Brazil vs. Cosan SA | Cyrela Brazil vs. Lojas Renner SA |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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