Correlation Between Metalurgica Gerdau and Iron Mountain
Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau and Iron Mountain 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 Metalurgica Gerdau and Iron Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metalurgica Gerdau SA and Iron Mountain Incorporated, you can compare the effects of market volatilities on Metalurgica Gerdau and Iron Mountain 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 Metalurgica Gerdau with a short position of Iron Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and Iron Mountain.
Diversification Opportunities for Metalurgica Gerdau and Iron Mountain
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Metalurgica and Iron is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and Iron Mountain Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Mountain and Metalurgica Gerdau 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 Metalurgica Gerdau SA are associated (or correlated) with Iron Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Mountain has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and Iron Mountain go up and down completely randomly.
Pair Corralation between Metalurgica Gerdau and Iron Mountain
Assuming the 90 days trading horizon Metalurgica Gerdau is expected to generate 10.39 times less return on investment than Iron Mountain. But when comparing it to its historical volatility, Metalurgica Gerdau SA is 1.53 times less risky than Iron Mountain. It trades about 0.04 of its potential returns per unit of risk. Iron Mountain Incorporated is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 30,816 in Iron Mountain Incorporated on September 2, 2024 and sell it today you would earn a total of 43,659 from holding Iron Mountain Incorporated or generate 141.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 59.6% |
| Values | Daily Returns |
Metalurgica Gerdau SA vs. Iron Mountain Incorporated
Performance |
| Timeline |
| Metalurgica Gerdau |
| Iron Mountain |
Metalurgica Gerdau and Iron Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalurgica Gerdau and Iron Mountain
The main advantage of trading using opposite Metalurgica Gerdau and Iron Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalurgica Gerdau position performs unexpectedly, Iron Mountain 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 Iron Mountain will offset losses from the drop in Iron Mountain's long position.| Metalurgica Gerdau vs. Companhia Paranaense de | Metalurgica Gerdau vs. Fras le SA | Metalurgica Gerdau vs. Energisa SA | Metalurgica Gerdau vs. Clave Indices De |
| Iron Mountain vs. Fras le SA | Iron Mountain vs. Western Digital | Iron Mountain vs. Energisa SA | Iron Mountain vs. Clave Indices De |
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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