Correlation Between Metalurgica Gerdau and American Tower
Can any of the company-specific risk be diversified away by investing in both Metalurgica Gerdau and American Tower 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 American Tower 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 American Tower, you can compare the effects of market volatilities on Metalurgica Gerdau and American Tower 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 American Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metalurgica Gerdau and American Tower.
Diversification Opportunities for Metalurgica Gerdau and American Tower
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Metalurgica and American is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and American Tower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Tower 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 American Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Tower has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and American Tower go up and down completely randomly.
Pair Corralation between Metalurgica Gerdau and American Tower
Assuming the 90 days trading horizon Metalurgica Gerdau SA is expected to under-perform the American Tower. In addition to that, Metalurgica Gerdau is 1.19 times more volatile than American Tower. It trades about -0.21 of its total potential returns per unit of risk. American Tower is currently generating about 0.09 per unit of volatility. If you would invest 4,730 in American Tower on November 28, 2024 and sell it today you would earn a total of 160.00 from holding American Tower or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metalurgica Gerdau SA vs. American Tower
Performance |
| Timeline |
| Metalurgica Gerdau |
| American Tower |
Metalurgica Gerdau and American Tower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metalurgica Gerdau and American Tower
The main advantage of trading using opposite Metalurgica Gerdau and American Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalurgica Gerdau position performs unexpectedly, American Tower 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 American Tower will offset losses from the drop in American Tower'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 |
| American Tower vs. Fresenius Medical Care | American Tower vs. Bemobi Mobile Tech | American Tower vs. Guidewire Software, | American Tower vs. Delta Air Lines |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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