Correlation Between Metalurgica Gerdau and Lululemon Athletica
Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau and Lululemon Athletica 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 Lululemon Athletica 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 Lululemon Athletica, you can compare the effects of market volatilities on Metalurgica Gerdau and Lululemon Athletica 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 Lululemon Athletica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and Lululemon Athletica.
Diversification Opportunities for Metalurgica Gerdau and Lululemon Athletica
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Metalurgica and Lululemon is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica 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 Lululemon Athletica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lululemon Athletica has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and Lululemon Athletica go up and down completely randomly.
Pair Corralation between Metalurgica Gerdau and Lululemon Athletica
Assuming the 90 days trading horizon Metalurgica Gerdau SA is expected to generate 0.87 times more return on investment than Lululemon Athletica. However, Metalurgica Gerdau SA is 1.14 times less risky than Lululemon Athletica. It trades about 0.27 of its potential returns per unit of risk. Lululemon Athletica is currently generating about 0.18 per unit of risk. If you would invest 1,014 in Metalurgica Gerdau SA on September 4, 2024 and sell it today you would earn a total of 138.00 from holding Metalurgica Gerdau SA or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metalurgica Gerdau SA vs. Lululemon Athletica
Performance |
| Timeline |
| Metalurgica Gerdau |
| Lululemon Athletica |
Metalurgica Gerdau and Lululemon Athletica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalurgica Gerdau and Lululemon Athletica
The main advantage of trading using opposite Metalurgica Gerdau and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalurgica Gerdau position performs unexpectedly, Lululemon Athletica 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 Lululemon Athletica will offset losses from the drop in Lululemon Athletica's long position.| Metalurgica Gerdau vs. Companhia Siderrgica Nacional | Metalurgica Gerdau vs. Banco Bradesco SA | Metalurgica Gerdau vs. Vale SA | Metalurgica Gerdau vs. Petrleo Brasileiro SA |
| Lululemon Athletica vs. Broadcom | Lululemon Athletica vs. Verizon Communications | Lululemon Athletica vs. Charter Communications | Lululemon Athletica vs. Bank of America |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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