Correlation Between Gol Intelligent and NIPPON STEEL
Can any of the company-specific risk be diversified away by investing in both Gol Intelligent and NIPPON STEEL 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 Intelligent and NIPPON STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gol Intelligent Airlines and NIPPON STEEL SPADR, you can compare the effects of market volatilities on Gol Intelligent and NIPPON STEEL 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 Intelligent with a short position of NIPPON STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gol Intelligent and NIPPON STEEL.
Diversification Opportunities for Gol Intelligent and NIPPON STEEL
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Gol and NIPPON is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gol Intelligent Airlines and NIPPON STEEL SPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIPPON STEEL SPADR and Gol Intelligent 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 Intelligent Airlines are associated (or correlated) with NIPPON STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIPPON STEEL SPADR has no effect on the direction of Gol Intelligent i.e., Gol Intelligent and NIPPON STEEL go up and down completely randomly.
Pair Corralation between Gol Intelligent and NIPPON STEEL
Assuming the 90 days trading horizon Gol Intelligent Airlines is expected to under-perform the NIPPON STEEL. In addition to that, Gol Intelligent is 2.76 times more volatile than NIPPON STEEL SPADR. It trades about -0.01 of its total potential returns per unit of risk. NIPPON STEEL SPADR is currently generating about 0.02 per unit of volatility. If you would invest 564.00 in NIPPON STEEL SPADR on August 27, 2024 and sell it today you would earn a total of 51.00 from holding NIPPON STEEL SPADR or generate 9.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Gol Intelligent Airlines vs. NIPPON STEEL SPADR
Performance |
| Timeline |
| Gol Intelligent Airlines |
| NIPPON STEEL SPADR |
Gol Intelligent and NIPPON STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gol Intelligent and NIPPON STEEL
The main advantage of trading using opposite Gol Intelligent and NIPPON STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gol Intelligent position performs unexpectedly, NIPPON STEEL 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 NIPPON STEEL will offset losses from the drop in NIPPON STEEL's long position.| Gol Intelligent vs. Jupiter Fund Management | Gol Intelligent vs. Public Storage | Gol Intelligent vs. AGF Management Limited | Gol Intelligent vs. Fidelity National Information |
| NIPPON STEEL vs. ArcelorMittal SA | NIPPON STEEL vs. ArcelorMittal | NIPPON STEEL vs. Nippon Steel | NIPPON STEEL vs. Reliance Steel Aluminum |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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