Correlation Between LESTE FDO and Metalurgica Gerdau
Can any of the company-specific risk be diversified away by investing in both LESTE FDO and Metalurgica Gerdau 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 LESTE FDO and Metalurgica Gerdau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LESTE FDO INV and Metalurgica Gerdau SA, you can compare the effects of market volatilities on LESTE FDO and Metalurgica Gerdau 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 LESTE FDO with a short position of Metalurgica Gerdau. Check out your portfolio center. Please also check ongoing floating volatility patterns of LESTE FDO and Metalurgica Gerdau.
Diversification Opportunities for LESTE FDO and Metalurgica Gerdau
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LESTE and Metalurgica is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding LESTE FDO INV and Metalurgica Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalurgica Gerdau and LESTE FDO 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 LESTE FDO INV are associated (or correlated) with Metalurgica Gerdau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalurgica Gerdau has no effect on the direction of LESTE FDO i.e., LESTE FDO and Metalurgica Gerdau go up and down completely randomly.
Pair Corralation between LESTE FDO and Metalurgica Gerdau
Assuming the 90 days trading horizon LESTE FDO INV is expected to under-perform the Metalurgica Gerdau. But the fund apears to be less risky and, when comparing its historical volatility, LESTE FDO INV is 1.42 times less risky than Metalurgica Gerdau. The fund trades about -0.06 of its potential returns per unit of risk. The Metalurgica Gerdau SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,050 in Metalurgica Gerdau SA on August 29, 2024 and sell it today you would earn a total of 72.00 from holding Metalurgica Gerdau SA or generate 6.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LESTE FDO INV vs. Metalurgica Gerdau SA
Performance |
| Timeline |
| LESTE FDO INV |
| Metalurgica Gerdau |
LESTE FDO and Metalurgica Gerdau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LESTE FDO and Metalurgica Gerdau
The main advantage of trading using opposite LESTE FDO and Metalurgica Gerdau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LESTE FDO position performs unexpectedly, Metalurgica Gerdau 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 Metalurgica Gerdau will offset losses from the drop in Metalurgica Gerdau's long position.| LESTE FDO vs. Real Estate Investment | LESTE FDO vs. NAVI CRDITO IMOBILIRIO | LESTE FDO vs. LIFE CAPITAL PARTNERS | LESTE FDO vs. Cshg Jhsf Prime |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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