Correlation Between Grendene and Rossi Residencial
Can any of the company-specific risk be diversified away by investing in both Grendene and Rossi Residencial 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 Grendene and Rossi Residencial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grendene SA and Rossi Residencial SA, you can compare the effects of market volatilities on Grendene and Rossi Residencial 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 Grendene with a short position of Rossi Residencial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grendene and Rossi Residencial.
Diversification Opportunities for Grendene and Rossi Residencial
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grendene and Rossi is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Grendene SA and Rossi Residencial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rossi Residencial and Grendene 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 Grendene SA are associated (or correlated) with Rossi Residencial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rossi Residencial has no effect on the direction of Grendene i.e., Grendene and Rossi Residencial go up and down completely randomly.
Pair Corralation between Grendene and Rossi Residencial
Assuming the 90 days trading horizon Grendene SA is expected to generate 0.47 times more return on investment than Rossi Residencial. However, Grendene SA is 2.11 times less risky than Rossi Residencial. It trades about -0.03 of its potential returns per unit of risk. Rossi Residencial SA is currently generating about -0.05 per unit of risk. If you would invest 636.00 in Grendene SA on September 12, 2024 and sell it today you would lose (91.00) from holding Grendene SA or give up 14.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grendene SA vs. Rossi Residencial SA
Performance |
| Timeline |
| Grendene SA |
| Rossi Residencial |
Grendene and Rossi Residencial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grendene and Rossi Residencial
The main advantage of trading using opposite Grendene and Rossi Residencial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grendene position performs unexpectedly, Rossi Residencial 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 Rossi Residencial will offset losses from the drop in Rossi Residencial's long position.| Grendene vs. M Dias Branco | Grendene vs. Fleury SA | Grendene vs. Engie Brasil Energia | Grendene vs. Odontoprev SA |
| Rossi Residencial vs. Tupy SA | Rossi Residencial vs. Engie Brasil Energia | Rossi Residencial vs. Grendene SA | Rossi Residencial vs. M Dias Branco |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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