Correlation Between Gafisa SA and Localiza Rent
Can any of the company-specific risk be diversified away by investing in both Gafisa SA and Localiza Rent 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 Localiza Rent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gafisa SA and Localiza Rent a, you can compare the effects of market volatilities on Gafisa SA and Localiza Rent 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 Localiza Rent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gafisa SA and Localiza Rent.
Diversification Opportunities for Gafisa SA and Localiza Rent
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gafisa and Localiza is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Gafisa SA and Localiza Rent a in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Localiza Rent a 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 Localiza Rent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Localiza Rent a has no effect on the direction of Gafisa SA i.e., Gafisa SA and Localiza Rent go up and down completely randomly.
Pair Corralation between Gafisa SA and Localiza Rent
Assuming the 90 days trading horizon Gafisa SA is expected to under-perform the Localiza Rent. In addition to that, Gafisa SA is 2.61 times more volatile than Localiza Rent a. It trades about -0.06 of its total potential returns per unit of risk. Localiza Rent a is currently generating about -0.04 per unit of volatility. If you would invest 5,815 in Localiza Rent a on August 26, 2024 and sell it today you would lose (1,395) from holding Localiza Rent a or give up 23.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gafisa SA vs. Localiza Rent a
Performance |
| Timeline |
| Gafisa SA |
| Localiza Rent a |
Gafisa SA and Localiza Rent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gafisa SA and Localiza Rent
The main advantage of trading using opposite Gafisa SA and Localiza Rent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gafisa SA position performs unexpectedly, Localiza Rent 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 Localiza Rent will offset losses from the drop in Localiza Rent's 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 |
| Localiza Rent vs. METISA Metalrgica Timboense | Localiza Rent vs. Lupatech SA | Localiza Rent vs. Recrusul SA | Localiza Rent vs. Fras le SA |
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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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