Correlation Between Metalurgica Gerdau and Waste Management
Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on Metalurgica Gerdau and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and Waste Management.
Diversification Opportunities for Metalurgica Gerdau and Waste Management
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Metalurgica and Waste is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and Waste Management go up and down completely randomly.
Pair Corralation between Metalurgica Gerdau and Waste Management
Assuming the 90 days trading horizon Metalurgica Gerdau SA is expected to generate 1.26 times more return on investment than Waste Management. However, Metalurgica Gerdau is 1.26 times more volatile than Waste Management. It trades about 0.21 of its potential returns per unit of risk. Waste Management is currently generating about 0.24 per unit of risk. If you would invest 994.00 in Metalurgica Gerdau SA on August 26, 2024 and sell it today you would earn a total of 102.00 from holding Metalurgica Gerdau SA or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metalurgica Gerdau SA vs. Waste Management
Performance |
| Timeline |
| Metalurgica Gerdau |
| Waste Management |
Metalurgica Gerdau and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalurgica Gerdau and Waste Management
The main advantage of trading using opposite Metalurgica Gerdau and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalurgica Gerdau position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| Metalurgica Gerdau vs. Companhia Siderrgica Nacional | Metalurgica Gerdau vs. Fras le SA | Metalurgica Gerdau vs. Clave Indices De | Metalurgica Gerdau vs. BTG Pactual Logstica |
| Waste Management vs. Bemobi Mobile Tech | Waste Management vs. UnitedHealth Group Incorporated | Waste Management vs. United Rentals | Waste Management vs. Metalurgica Gerdau 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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