Correlation Between MAHLE Metal and Itasa Investimentos
Can any of the company-specific risk be diversified away by investing in both MAHLE Metal and Itasa Investimentos 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 Itasa Investimentos 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 Itasa Investimentos, you can compare the effects of market volatilities on MAHLE Metal and Itasa Investimentos 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 Itasa Investimentos. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAHLE Metal and Itasa Investimentos.
Diversification Opportunities for MAHLE Metal and Itasa Investimentos
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MAHLE and Itasa is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding MAHLE Metal Leve and Itasa Investimentos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itasa Investimentos 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 Itasa Investimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itasa Investimentos has no effect on the direction of MAHLE Metal i.e., MAHLE Metal and Itasa Investimentos go up and down completely randomly.
Pair Corralation between MAHLE Metal and Itasa Investimentos
Assuming the 90 days trading horizon MAHLE Metal is expected to generate 1.47 times less return on investment than Itasa Investimentos. But when comparing it to its historical volatility, MAHLE Metal Leve is 1.11 times less risky than Itasa Investimentos. It trades about 0.02 of its potential returns per unit of risk. Itasa Investimentos is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 871.00 in Itasa Investimentos on November 30, 2024 and sell it today you would earn a total of 8.00 from holding Itasa Investimentos or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAHLE Metal Leve vs. Itasa Investimentos
Performance |
| Timeline |
| MAHLE Metal Leve |
| Itasa Investimentos |
MAHLE Metal and Itasa Investimentos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAHLE Metal and Itasa Investimentos
The main advantage of trading using opposite MAHLE Metal and Itasa Investimentos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAHLE Metal position performs unexpectedly, Itasa Investimentos 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 Itasa Investimentos will offset losses from the drop in Itasa Investimentos' long position.| MAHLE Metal vs. Tupy SA | MAHLE Metal vs. Engie Brasil Energia | MAHLE Metal vs. Grendene SA | MAHLE Metal vs. M Dias Branco |
| Itasa Investimentos vs. Banco do Brasil | Itasa Investimentos vs. Banco Bradesco SA | Itasa Investimentos vs. Ita Unibanco Holding | Itasa Investimentos vs. Petrleo Brasileiro 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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