Correlation Between Gerdau SA and VF
Can any of the company-specific risk be diversified away by investing in both Gerdau SA and VF 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 VF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gerdau SA and VF Corporation, you can compare the effects of market volatilities on Gerdau SA and VF 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 VF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and VF.
Diversification Opportunities for Gerdau SA and VF
Modest diversification
The 3 months correlation between Gerdau and VF is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA and VF Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VF Corporation 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 VF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VF Corporation has no effect on the direction of Gerdau SA i.e., Gerdau SA and VF go up and down completely randomly.
Pair Corralation between Gerdau SA and VF
Assuming the 90 days trading horizon Gerdau SA is expected to under-perform the VF. But the preferred stock apears to be less risky and, when comparing its historical volatility, Gerdau SA is 2.94 times less risky than VF. The preferred stock trades about -0.05 of its potential returns per unit of risk. The VF Corporation is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,540 in VF Corporation on October 15, 2024 and sell it today you would earn a total of 1,439 from holding VF Corporation or generate 25.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gerdau SA vs. VF Corp.
Performance |
| Timeline |
| Gerdau SA |
| VF Corporation |
Gerdau SA and VF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gerdau SA and VF
The main advantage of trading using opposite Gerdau SA and VF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gerdau SA position performs unexpectedly, VF 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 VF will offset losses from the drop in VF's long position.| Gerdau SA vs. Usinas Siderrgicas de | Gerdau SA vs. Companhia Siderrgica Nacional | Gerdau SA vs. Banco Bradesco SA | Gerdau SA vs. Vale SA |
| VF vs. Molson Coors Beverage | VF vs. Bemobi Mobile Tech | VF vs. SK Telecom Co, | VF vs. Chunghwa Telecom Co, |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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