Correlation Between Gol Linhas and IRB Brasil
Can any of the company-specific risk be diversified away by investing in both Gol Linhas and IRB Brasil 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 IRB Brasil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gol Linhas Areas and IRB Brasil Resseguros SA, you can compare the effects of market volatilities on Gol Linhas and IRB Brasil 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 IRB Brasil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gol Linhas and IRB Brasil.
Diversification Opportunities for Gol Linhas and IRB Brasil
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gol and IRB is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Gol Linhas Areas and IRB Brasil Resseguros SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRB Brasil Resseguros 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 Areas are associated (or correlated) with IRB Brasil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRB Brasil Resseguros has no effect on the direction of Gol Linhas i.e., Gol Linhas and IRB Brasil go up and down completely randomly.
Pair Corralation between Gol Linhas and IRB Brasil
Assuming the 90 days trading horizon Gol Linhas Areas is expected to under-perform the IRB Brasil. In addition to that, Gol Linhas is 1.13 times more volatile than IRB Brasil Resseguros SA. It trades about -0.05 of its total potential returns per unit of risk. IRB Brasil Resseguros SA is currently generating about 0.05 per unit of volatility. If you would invest 2,040 in IRB Brasil Resseguros SA on August 28, 2024 and sell it today you would earn a total of 1,935 from holding IRB Brasil Resseguros SA or generate 94.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gol Linhas Areas vs. IRB Brasil Resseguros SA
Performance |
| Timeline |
| Gol Linhas Areas |
| IRB Brasil Resseguros |
Gol Linhas and IRB Brasil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gol Linhas and IRB Brasil
The main advantage of trading using opposite Gol Linhas and IRB Brasil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gol Linhas position performs unexpectedly, IRB Brasil 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 IRB Brasil will offset losses from the drop in IRB Brasil's long position.| Gol Linhas vs. Fras le SA | Gol Linhas vs. Indstrias Romi SA | Gol Linhas vs. Clave Indices De | Gol Linhas vs. BTG Pactual Logstica |
| IRB Brasil vs. Banco Alfa de | IRB Brasil vs. Financeira Alfa SA | IRB Brasil vs. Banco Alfa de | IRB Brasil vs. Financeira Alfa 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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