Correlation Between Cia De and United States
Can any of the company-specific risk be diversified away by investing in both Cia De 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 Cia De and United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cia de Ferro and United States Steel, you can compare the effects of market volatilities on Cia De 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 Cia De with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cia De and United States.
Diversification Opportunities for Cia De and United States
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cia and United is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cia de Ferro 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 Cia De 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 Cia de Ferro 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 Cia De i.e., Cia De and United States go up and down completely randomly.
Pair Corralation between Cia De and United States
Assuming the 90 days trading horizon Cia de Ferro is expected to under-perform the United States. But the preferred stock apears to be less risky and, when comparing its historical volatility, Cia de Ferro is 2.41 times less risky than United States. The preferred stock trades about -0.03 of its potential returns per unit of risk. The United States Steel is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 20,940 in United States Steel on August 23, 2024 and sell it today you would earn a total of 1,478 from holding United States Steel or generate 7.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cia de Ferro vs. United States Steel
Performance |
| Timeline |
| Cia de Ferro |
| United States Steel |
Cia De and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cia De and United States
The main advantage of trading using opposite Cia De and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cia De 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.| Cia De vs. Companhia Siderrgica Nacional | Cia De vs. Gerdau SA | Cia De vs. Metalurgica Gerdau SA | Cia De vs. Companhia Energtica de |
| United States vs. Companhia Siderrgica Nacional | United States vs. Metalurgica Gerdau SA | United States vs. Metalurgica Gerdau SA | United States vs. Usinas Siderrgicas 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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