Correlation Between Gerdau SA and Worthington Steel
Can any of the company-specific risk be diversified away by investing in both Gerdau SA and Worthington Steel 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 Gerdau SA and Worthington Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gerdau SA ADR and Worthington Steel, you can compare the effects of market volatilities on Gerdau SA and Worthington Steel 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 Gerdau SA with a short position of Worthington Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and Worthington Steel.
Diversification Opportunities for Gerdau SA and Worthington Steel
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gerdau and Worthington is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA ADR and Worthington Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Steel and Gerdau 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 Gerdau SA ADR are associated (or correlated) with Worthington Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Steel has no effect on the direction of Gerdau SA i.e., Gerdau SA and Worthington Steel go up and down completely randomly.
Pair Corralation between Gerdau SA and Worthington Steel
Considering the 90-day investment horizon Gerdau SA ADR is expected to under-perform the Worthington Steel. But the stock apears to be less risky and, when comparing its historical volatility, Gerdau SA ADR is 1.88 times less risky than Worthington Steel. The stock trades about -0.01 of its potential returns per unit of risk. The Worthington Steel is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,461 in Worthington Steel on August 31, 2024 and sell it today you would earn a total of 2,023 from holding Worthington Steel or generate 82.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 68.18% |
| Values | Daily Returns |
Gerdau SA ADR vs. Worthington Steel
Performance |
| Timeline |
| Gerdau SA ADR |
| Worthington Steel |
Gerdau SA and Worthington Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gerdau SA and Worthington Steel
The main advantage of trading using opposite Gerdau SA and Worthington Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gerdau SA position performs unexpectedly, Worthington Steel 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 Worthington Steel will offset losses from the drop in Worthington Steel's long position.| Gerdau SA vs. Usinas Siderurgicas de | Gerdau SA vs. Ternium SA ADR | Gerdau SA vs. ArcelorMittal SA ADR | Gerdau SA vs. POSCO Holdings |
| Worthington Steel vs. Ambev SA ADR | Worthington Steel vs. SNDL Inc | Worthington Steel vs. Freedom Holding Corp | Worthington Steel vs. Kite Realty Group |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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