Correlation Between Distribuidora and United States
Can any of the company-specific risk be diversified away by investing in both Distribuidora and United States 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 Distribuidora and United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Distribuidora de Gas and United States Steel, you can compare the effects of market volatilities on Distribuidora and United States 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 Distribuidora with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Distribuidora and United States.
Diversification Opportunities for Distribuidora and United States
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Distribuidora and United is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Distribuidora de Gas and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel and Distribuidora 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 Distribuidora de Gas are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Distribuidora i.e., Distribuidora and United States go up and down completely randomly.
Pair Corralation between Distribuidora and United States
Assuming the 90 days trading horizon Distribuidora de Gas is expected to under-perform the United States. In addition to that, Distribuidora is 1.01 times more volatile than United States Steel. It trades about -0.11 of its total potential returns per unit of risk. United States Steel is currently generating about 0.28 per unit of volatility. If you would invest 1,202,500 in United States Steel on October 20, 2024 and sell it today you would earn a total of 230,000 from holding United States Steel or generate 19.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Distribuidora de Gas vs. United States Steel
Performance |
| Timeline |
| Distribuidora de Gas |
| United States Steel |
Distribuidora and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Distribuidora and United States
The main advantage of trading using opposite Distribuidora and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Distribuidora position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| Distribuidora vs. Naturgy BAN SA | Distribuidora vs. Transportadora de Gas | Distribuidora vs. Walmart | Distribuidora vs. Central Puerto SA |
| United States vs. Pfizer Inc | United States vs. Instituto Rosenbusch SA | United States vs. Sociedad Comercial del | United States vs. Ledesma SAAI |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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