Correlation Between Banco Do and MAHLE Metal
Can any of the company-specific risk be diversified away by investing in both Banco Do and MAHLE Metal 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 Banco Do and MAHLE Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco do Estado and MAHLE Metal Leve, you can compare the effects of market volatilities on Banco Do and MAHLE Metal 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 Banco Do with a short position of MAHLE Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Do and MAHLE Metal.
Diversification Opportunities for Banco Do and MAHLE Metal
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Banco and MAHLE is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Banco do Estado and MAHLE Metal Leve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAHLE Metal Leve and Banco Do 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 Banco do Estado are associated (or correlated) with MAHLE Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAHLE Metal Leve has no effect on the direction of Banco Do i.e., Banco Do and MAHLE Metal go up and down completely randomly.
Pair Corralation between Banco Do and MAHLE Metal
Assuming the 90 days trading horizon Banco do Estado is expected to generate 1.33 times more return on investment than MAHLE Metal. However, Banco Do is 1.33 times more volatile than MAHLE Metal Leve. It trades about 0.03 of its potential returns per unit of risk. MAHLE Metal Leve is currently generating about -0.03 per unit of risk. If you would invest 971.00 in Banco do Estado on October 23, 2024 and sell it today you would earn a total of 6.00 from holding Banco do Estado or generate 0.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco do Estado vs. MAHLE Metal Leve
Performance |
| Timeline |
| Banco do Estado |
| MAHLE Metal Leve |
Banco Do and MAHLE Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Do and MAHLE Metal
The main advantage of trading using opposite Banco Do and MAHLE Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Do position performs unexpectedly, MAHLE Metal 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 MAHLE Metal will offset losses from the drop in MAHLE Metal's long position.| Banco Do vs. BB Seguridade Participacoes | Banco Do vs. Banco ABC Brasil | Banco Do vs. Companhia de Saneamento | Banco Do vs. CTEEP Companhia |
| MAHLE Metal vs. Tupy SA | MAHLE Metal vs. Engie Brasil Energia | MAHLE Metal vs. Grendene SA | MAHLE Metal vs. M Dias Branco |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |