Correlation Between Gol Linhas and BRF SA
Can any of the company-specific risk be diversified away by investing in both Gol Linhas and BRF SA 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 Gol Linhas and BRF SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gol Linhas Aereas and BRF SA ADR, you can compare the effects of market volatilities on Gol Linhas and BRF SA 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 Gol Linhas with a short position of BRF SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gol Linhas and BRF SA.
Diversification Opportunities for Gol Linhas and BRF SA
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gol and BRF is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Gol Linhas Aereas and BRF SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRF SA ADR and Gol Linhas 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 Gol Linhas Aereas are associated (or correlated) with BRF SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRF SA ADR has no effect on the direction of Gol Linhas i.e., Gol Linhas and BRF SA go up and down completely randomly.
Pair Corralation between Gol Linhas and BRF SA
Considering the 90-day investment horizon Gol Linhas Aereas is expected to generate 1.52 times more return on investment than BRF SA. However, Gol Linhas is 1.52 times more volatile than BRF SA ADR. It trades about 0.07 of its potential returns per unit of risk. BRF SA ADR is currently generating about 0.08 per unit of risk. If you would invest 305.00 in Gol Linhas Aereas on August 27, 2024 and sell it today you would earn a total of 133.00 from holding Gol Linhas Aereas or generate 43.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 31.85% |
| Values | Daily Returns |
Gol Linhas Aereas vs. BRF SA ADR
Performance |
| Timeline |
| Gol Linhas Aereas |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| BRF SA ADR |
Gol Linhas and BRF SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gol Linhas and BRF SA
The main advantage of trading using opposite Gol Linhas and BRF SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gol Linhas position performs unexpectedly, BRF SA 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 BRF SA will offset losses from the drop in BRF SA's long position.| Gol Linhas vs. Azul SA | Gol Linhas vs. Air France KLM | Gol Linhas vs. Copa Holdings SA | Gol Linhas vs. International Consolidated Airlines |
| BRF SA vs. Marfrig Global Foods | BRF SA vs. Pilgrims Pride Corp | BRF SA vs. John B Sanfilippo | BRF SA vs. Seneca Foods Corp |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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