Correlation Between Libertas 7 and Vale SA
Can any of the company-specific risk be diversified away by investing in both Libertas 7 and Vale SA 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 Libertas 7 and Vale SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Libertas 7 SA and Vale SA, you can compare the effects of market volatilities on Libertas 7 and Vale SA 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 Libertas 7 with a short position of Vale SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Libertas 7 and Vale SA.
Diversification Opportunities for Libertas 7 and Vale SA
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Libertas and Vale is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Libertas 7 SA and Vale SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA and Libertas 7 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 Libertas 7 SA are associated (or correlated) with Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA has no effect on the direction of Libertas 7 i.e., Libertas 7 and Vale SA go up and down completely randomly.
Pair Corralation between Libertas 7 and Vale SA
Assuming the 90 days trading horizon Libertas 7 SA is expected to generate 4.19 times more return on investment than Vale SA. However, Libertas 7 is 4.19 times more volatile than Vale SA. It trades about 0.15 of its potential returns per unit of risk. Vale SA is currently generating about -0.31 per unit of risk. If you would invest 153.00 in Libertas 7 SA on September 25, 2024 and sell it today you would earn a total of 25.00 from holding Libertas 7 SA or generate 16.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Libertas 7 SA vs. Vale SA
Performance |
| Timeline |
| Libertas 7 SA |
| Vale SA |
Libertas 7 and Vale SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Libertas 7 and Vale SA
The main advantage of trading using opposite Libertas 7 and Vale SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Libertas 7 position performs unexpectedly, Vale SA 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 Vale SA will offset losses from the drop in Vale SA's long position.| Libertas 7 vs. Realia | Libertas 7 vs. Inmobiliaria del Sur | Libertas 7 vs. Montebalito SA | Libertas 7 vs. Renta Corporacion Real |
| Vale SA vs. Berkeley Energia Limited | Vale SA vs. Lingotes | Vale SA vs. Banco Santander | Vale SA vs. ACS Actividades de |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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