Correlation Between Metalurgica Gerdau and Liberty Broadband
Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau and Liberty Broadband 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 Liberty Broadband 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 Liberty Broadband, you can compare the effects of market volatilities on Metalurgica Gerdau and Liberty Broadband 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 Liberty Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and Liberty Broadband.
Diversification Opportunities for Metalurgica Gerdau and Liberty Broadband
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metalurgica and Liberty is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and Liberty Broadband in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband 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 Liberty Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Broadband has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and Liberty Broadband go up and down completely randomly.
Pair Corralation between Metalurgica Gerdau and Liberty Broadband
Assuming the 90 days trading horizon Metalurgica Gerdau SA is expected to generate 0.93 times more return on investment than Liberty Broadband. However, Metalurgica Gerdau SA is 1.07 times less risky than Liberty Broadband. It trades about -0.05 of its potential returns per unit of risk. Liberty Broadband is currently generating about -0.07 per unit of risk. If you would invest 1,007 in Metalurgica Gerdau SA on November 5, 2024 and sell it today you would lose (24.00) from holding Metalurgica Gerdau SA or give up 2.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metalurgica Gerdau SA vs. Liberty Broadband
Performance |
| Timeline |
| Metalurgica Gerdau |
| Liberty Broadband |
Metalurgica Gerdau and Liberty Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalurgica Gerdau and Liberty Broadband
The main advantage of trading using opposite Metalurgica Gerdau and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalurgica Gerdau position performs unexpectedly, Liberty Broadband 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 Liberty Broadband will offset losses from the drop in Liberty Broadband'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 |
| Liberty Broadband vs. Taiwan Semiconductor Manufacturing | Liberty Broadband vs. Apple Inc | Liberty Broadband vs. Alibaba Group Holding | Liberty Broadband vs. Microsoft |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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