Correlation Between BTG Pactual and Metalurgica Gerdau
Can any of the company-specific risk be diversified away by investing in both BTG Pactual and Metalurgica Gerdau 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 BTG Pactual and Metalurgica Gerdau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTG Pactual Logstica and Metalurgica Gerdau SA, you can compare the effects of market volatilities on BTG Pactual and Metalurgica Gerdau 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 BTG Pactual with a short position of Metalurgica Gerdau. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTG Pactual and Metalurgica Gerdau.
Diversification Opportunities for BTG Pactual and Metalurgica Gerdau
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between BTG and Metalurgica is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding BTG Pactual Logstica and Metalurgica Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalurgica Gerdau and BTG Pactual 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 BTG Pactual Logstica are associated (or correlated) with Metalurgica Gerdau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalurgica Gerdau has no effect on the direction of BTG Pactual i.e., BTG Pactual and Metalurgica Gerdau go up and down completely randomly.
Pair Corralation between BTG Pactual and Metalurgica Gerdau
Assuming the 90 days trading horizon BTG Pactual is expected to generate 1.11 times less return on investment than Metalurgica Gerdau. But when comparing it to its historical volatility, BTG Pactual Logstica is 3.06 times less risky than Metalurgica Gerdau. It trades about 0.02 of its potential returns per unit of risk. Metalurgica Gerdau SA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,114 in Metalurgica Gerdau SA on August 26, 2024 and sell it today you would lose (30.00) from holding Metalurgica Gerdau SA or give up 2.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
BTG Pactual Logstica vs. Metalurgica Gerdau SA
Performance |
| Timeline |
| BTG Pactual Logstica |
| Metalurgica Gerdau |
BTG Pactual and Metalurgica Gerdau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BTG Pactual and Metalurgica Gerdau
The main advantage of trading using opposite BTG Pactual and Metalurgica Gerdau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTG Pactual position performs unexpectedly, Metalurgica Gerdau 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 Metalurgica Gerdau will offset losses from the drop in Metalurgica Gerdau's long position.| BTG Pactual vs. Plano Plano Desenvolvimento | BTG Pactual vs. Cable One | BTG Pactual vs. ATMA Participaes SA | BTG Pactual vs. British American Tobacco |
| Metalurgica Gerdau vs. Companhia Siderrgica Nacional | Metalurgica Gerdau vs. Companhia Energtica de | Metalurgica Gerdau vs. Companhia Paranaense de |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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