Correlation Between Metalurgica Gerdau and Localiza Rent
Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau and Localiza Rent 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 Localiza Rent 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 Localiza Rent a, you can compare the effects of market volatilities on Metalurgica Gerdau and Localiza Rent 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 Localiza Rent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and Localiza Rent.
Diversification Opportunities for Metalurgica Gerdau and Localiza Rent
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Metalurgica and Localiza is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and Localiza Rent a in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Localiza Rent a 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 Localiza Rent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Localiza Rent a has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and Localiza Rent go up and down completely randomly.
Pair Corralation between Metalurgica Gerdau and Localiza Rent
Assuming the 90 days trading horizon Metalurgica Gerdau SA is expected to generate 0.82 times more return on investment than Localiza Rent. However, Metalurgica Gerdau SA is 1.22 times less risky than Localiza Rent. It trades about 0.12 of its potential returns per unit of risk. Localiza Rent a is currently generating about -0.04 per unit of risk. If you would invest 1,005 in Metalurgica Gerdau SA on September 3, 2024 and sell it today you would earn a total of 141.00 from holding Metalurgica Gerdau SA or generate 14.03% 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. Localiza Rent a
Performance |
| Timeline |
| Metalurgica Gerdau |
| Localiza Rent a |
Metalurgica Gerdau and Localiza Rent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalurgica Gerdau and Localiza Rent
The main advantage of trading using opposite Metalurgica Gerdau and Localiza Rent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalurgica Gerdau position performs unexpectedly, Localiza Rent 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 Localiza Rent will offset losses from the drop in Localiza Rent'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 |
| Localiza Rent vs. Oi SA | Localiza Rent vs. Metalurgica Gerdau SA | Localiza Rent vs. Metalurgica Gerdau SA | Localiza Rent vs. Oi 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 CEOs Directory module to screen CEOs from public companies around the world.
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