Correlation Between Metalurgica Gerdau and British American
Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau and British American 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 British American 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 British American Tobacco, you can compare the effects of market volatilities on Metalurgica Gerdau and British American 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 British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and British American.
Diversification Opportunities for Metalurgica Gerdau and British American
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Metalurgica and British is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco 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 British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and British American go up and down completely randomly.
Pair Corralation between Metalurgica Gerdau and British American
Assuming the 90 days trading horizon Metalurgica Gerdau SA is expected to generate 0.87 times more return on investment than British American. However, Metalurgica Gerdau SA is 1.15 times less risky than British American. It trades about 0.02 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.01 per unit of risk. If you would invest 969.00 in Metalurgica Gerdau SA on November 18, 2024 and sell it today you would earn a total of 4.00 from holding Metalurgica Gerdau SA or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metalurgica Gerdau SA vs. British American Tobacco
Performance |
| Timeline |
| Metalurgica Gerdau |
| British American Tobacco |
Metalurgica Gerdau and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalurgica Gerdau and British American
The main advantage of trading using opposite Metalurgica Gerdau and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalurgica Gerdau position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| Metalurgica Gerdau vs. Usinas Siderrgicas de | Metalurgica Gerdau vs. Gerdau SA | Metalurgica Gerdau vs. Companhia Siderrgica Nacional | Metalurgica Gerdau vs. Companhia Energtica de |
| British American vs. Pentair plc | British American vs. Warner Music Group | British American vs. Verizon Communications | British American vs. Ryanair Holdings plc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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