Correlation Between Gerdau SA and F1RA34
Can any of the company-specific risk be diversified away by investing in both Gerdau SA and F1RA34 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 F1RA34 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gerdau SA and F1RA34, you can compare the effects of market volatilities on Gerdau SA and F1RA34 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 F1RA34. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and F1RA34.
Diversification Opportunities for Gerdau SA and F1RA34
Poor diversification
The 3 months correlation between Gerdau and F1RA34 is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA and F1RA34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F1RA34 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 are associated (or correlated) with F1RA34. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F1RA34 has no effect on the direction of Gerdau SA i.e., Gerdau SA and F1RA34 go up and down completely randomly.
Pair Corralation between Gerdau SA and F1RA34
Assuming the 90 days trading horizon Gerdau SA is expected to generate 0.73 times more return on investment than F1RA34. However, Gerdau SA is 1.37 times less risky than F1RA34. It trades about 0.04 of its potential returns per unit of risk. F1RA34 is currently generating about 0.02 per unit of risk. If you would invest 1,764 in Gerdau SA on September 28, 2024 and sell it today you would earn a total of 107.00 from holding Gerdau SA or generate 6.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gerdau SA vs. F1RA34
Performance |
| Timeline |
| Gerdau SA |
| F1RA34 |
Gerdau SA and F1RA34 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gerdau SA and F1RA34
The main advantage of trading using opposite Gerdau SA and F1RA34 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gerdau SA position performs unexpectedly, F1RA34 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 F1RA34 will offset losses from the drop in F1RA34's long position.| Gerdau SA vs. Companhia Siderrgica Nacional | Gerdau SA vs. Banco Bradesco SA | Gerdau SA vs. Vale SA | Gerdau SA vs. Petrleo Brasileiro SA |
| F1RA34 vs. Taiwan Semiconductor Manufacturing | F1RA34 vs. Apple Inc | F1RA34 vs. Alibaba Group Holding | F1RA34 vs. Microsoft |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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