Correlation Between Bolsas Y and Vale SA
Can any of the company-specific risk be diversified away by investing in both Bolsas Y and Vale 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 Bolsas Y and Vale SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bolsas y Mercados and Vale SA, you can compare the effects of market volatilities on Bolsas Y and Vale 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 Bolsas Y with a short position of Vale SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bolsas Y and Vale SA.
Diversification Opportunities for Bolsas Y and Vale SA
Good diversification
The 3 months correlation between Bolsas and Vale is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bolsas y Mercados and Vale SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA and Bolsas Y 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 Bolsas y Mercados are associated (or correlated) with Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA has no effect on the direction of Bolsas Y i.e., Bolsas Y and Vale SA go up and down completely randomly.
Pair Corralation between Bolsas Y and Vale SA
Assuming the 90 days trading horizon Bolsas y Mercados is expected to under-perform the Vale SA. In addition to that, Bolsas Y is 1.5 times more volatile than Vale SA. It trades about -0.08 of its total potential returns per unit of risk. Vale SA is currently generating about 0.29 per unit of volatility. If you would invest 538,000 in Vale SA on November 28, 2024 and sell it today you would earn a total of 63,000 from holding Vale SA or generate 11.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bolsas y Mercados vs. Vale SA
Performance |
| Timeline |
| Bolsas y Mercados |
| Vale SA |
Bolsas Y and Vale SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bolsas Y and Vale SA
The main advantage of trading using opposite Bolsas Y and Vale SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bolsas Y position performs unexpectedly, Vale 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 Vale SA will offset losses from the drop in Vale SA's long position.| Bolsas Y vs. Telecom Argentina | Bolsas Y vs. Agrometal SAI | Bolsas Y vs. Compania de Transporte | Bolsas Y vs. Verizon Communications |
| Vale SA vs. Harmony Gold Mining | Vale SA vs. Verizon Communications | Vale SA vs. Telecom Argentina | Vale SA vs. United States Steel |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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