Correlation Between Gafisa SA and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Gafisa SA and Dow Jones 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 Gafisa SA and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gafisa SA and Dow Jones Industrial, you can compare the effects of market volatilities on Gafisa SA and Dow Jones 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 Gafisa SA with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gafisa SA and Dow Jones.
Diversification Opportunities for Gafisa SA and Dow Jones
Pay attention - limited upside
The 3 months correlation between Gafisa and Dow is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Gafisa SA and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Gafisa SA 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 Gafisa SA are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Gafisa SA i.e., Gafisa SA and Dow Jones go up and down completely randomly.
Pair Corralation between Gafisa SA and Dow Jones
Assuming the 90 days trading horizon Gafisa SA is expected to under-perform the Dow Jones. In addition to that, Gafisa SA is 8.77 times more volatile than Dow Jones Industrial. It trades about -0.06 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of volatility. If you would invest 3,624,550 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 805,101 from holding Dow Jones Industrial or generate 22.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Gafisa SA vs. Dow Jones Industrial
Performance |
| Timeline |
Gafisa SA and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Gafisa SA
Pair trading matchups for Gafisa SA
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Gafisa SA and Dow Jones
The main advantage of trading using opposite Gafisa SA and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gafisa SA position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Gafisa SA vs. Cyrela Brazil Realty | Gafisa SA vs. Rossi Residencial SA | Gafisa SA vs. MRV Engenharia e | Gafisa SA vs. PDG Realty SA |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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