Correlation Between Cleveland Cliffs and Gerdau SA
Can any of the company-specific risk be diversified away by investing in both Cleveland Cliffs and Gerdau 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 Cleveland Cliffs and Gerdau SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cleveland Cliffs and Gerdau SA ADR, you can compare the effects of market volatilities on Cleveland Cliffs and Gerdau 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 Cleveland Cliffs with a short position of Gerdau SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cleveland Cliffs and Gerdau SA.
Diversification Opportunities for Cleveland Cliffs and Gerdau SA
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cleveland and Gerdau is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Cleveland Cliffs and Gerdau SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerdau SA ADR and Cleveland Cliffs 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 Cleveland Cliffs are associated (or correlated) with Gerdau SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gerdau SA ADR has no effect on the direction of Cleveland Cliffs i.e., Cleveland Cliffs and Gerdau SA go up and down completely randomly.
Pair Corralation between Cleveland Cliffs and Gerdau SA
Considering the 90-day investment horizon Cleveland Cliffs is expected to generate 1.32 times more return on investment than Gerdau SA. However, Cleveland Cliffs is 1.32 times more volatile than Gerdau SA ADR. It trades about 0.0 of its potential returns per unit of risk. Gerdau SA ADR is currently generating about -0.01 per unit of risk. If you would invest 1,583 in Cleveland Cliffs on August 28, 2024 and sell it today you would lose (334.00) from holding Cleveland Cliffs or give up 21.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cleveland Cliffs vs. Gerdau SA ADR
Performance |
| Timeline |
| Cleveland Cliffs |
| Gerdau SA ADR |
Cleveland Cliffs and Gerdau SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cleveland Cliffs and Gerdau SA
The main advantage of trading using opposite Cleveland Cliffs and Gerdau SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cleveland Cliffs position performs unexpectedly, Gerdau 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 Gerdau SA will offset losses from the drop in Gerdau SA's long position.| Cleveland Cliffs vs. Nucor Corp | Cleveland Cliffs vs. Steel Dynamics | Cleveland Cliffs vs. ArcelorMittal SA ADR | Cleveland Cliffs vs. Gerdau SA ADR |
| Gerdau SA vs. Usinas Siderurgicas de | Gerdau SA vs. Ternium SA ADR | Gerdau SA vs. ArcelorMittal SA ADR | Gerdau SA vs. POSCO Holdings |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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