Correlation Between MAHLE Metal and Banco Do
Can any of the company-specific risk be diversified away by investing in both MAHLE Metal and Banco Do 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 MAHLE Metal and Banco Do into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAHLE Metal Leve and Banco do Estado, you can compare the effects of market volatilities on MAHLE Metal and Banco Do 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 MAHLE Metal with a short position of Banco Do. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAHLE Metal and Banco Do.
Diversification Opportunities for MAHLE Metal and Banco Do
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MAHLE and Banco is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding MAHLE Metal Leve and Banco do Estado in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco do Estado and MAHLE Metal 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 MAHLE Metal Leve are associated (or correlated) with Banco Do. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco do Estado has no effect on the direction of MAHLE Metal i.e., MAHLE Metal and Banco Do go up and down completely randomly.
Pair Corralation between MAHLE Metal and Banco Do
Assuming the 90 days trading horizon MAHLE Metal Leve is expected to generate 0.95 times more return on investment than Banco Do. However, MAHLE Metal Leve is 1.05 times less risky than Banco Do. It trades about -0.02 of its potential returns per unit of risk. Banco do Estado is currently generating about -0.05 per unit of risk. If you would invest 3,156 in MAHLE Metal Leve on November 3, 2024 and sell it today you would lose (321.00) from holding MAHLE Metal Leve or give up 10.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
MAHLE Metal Leve vs. Banco do Estado
Performance |
| Timeline |
| MAHLE Metal Leve |
| Banco do Estado |
MAHLE Metal and Banco Do Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAHLE Metal and Banco Do
The main advantage of trading using opposite MAHLE Metal and Banco Do positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAHLE Metal position performs unexpectedly, Banco Do 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 Banco Do will offset losses from the drop in Banco Do's long position.| MAHLE Metal vs. Tupy SA | MAHLE Metal vs. Engie Brasil Energia | MAHLE Metal vs. Grendene SA | MAHLE Metal vs. M Dias Branco |
| Banco Do vs. BB Seguridade Participacoes | Banco Do vs. Banco ABC Brasil | Banco Do vs. Companhia de Saneamento | Banco Do vs. CTEEP Companhia |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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