Correlation Between Iochpe Maxion and Grendene
Can any of the company-specific risk be diversified away by investing in both Iochpe Maxion and Grendene 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 Iochpe Maxion and Grendene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iochpe Maxion SA and Grendene SA, you can compare the effects of market volatilities on Iochpe Maxion and Grendene 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 Iochpe Maxion with a short position of Grendene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iochpe Maxion and Grendene.
Diversification Opportunities for Iochpe Maxion and Grendene
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Iochpe and Grendene is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Iochpe Maxion SA and Grendene SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grendene SA and Iochpe Maxion 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 Iochpe Maxion SA are associated (or correlated) with Grendene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grendene SA has no effect on the direction of Iochpe Maxion i.e., Iochpe Maxion and Grendene go up and down completely randomly.
Pair Corralation between Iochpe Maxion and Grendene
Assuming the 90 days trading horizon Iochpe Maxion SA is expected to generate 1.32 times more return on investment than Grendene. However, Iochpe Maxion is 1.32 times more volatile than Grendene SA. It trades about 0.35 of its potential returns per unit of risk. Grendene SA is currently generating about 0.07 per unit of risk. If you would invest 993.00 in Iochpe Maxion SA on September 2, 2024 and sell it today you would earn a total of 180.00 from holding Iochpe Maxion SA or generate 18.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iochpe Maxion SA vs. Grendene SA
Performance |
| Timeline |
| Iochpe Maxion SA |
| Grendene SA |
Iochpe Maxion and Grendene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iochpe Maxion and Grendene
The main advantage of trading using opposite Iochpe Maxion and Grendene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iochpe Maxion position performs unexpectedly, Grendene 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 Grendene will offset losses from the drop in Grendene's long position.| Iochpe Maxion vs. Tupy SA | Iochpe Maxion vs. MAHLE Metal Leve | Iochpe Maxion vs. Randon SA Implementos | Iochpe Maxion vs. Marcopolo SA |
| Grendene vs. Engie Brasil Energia | Grendene vs. Fras le SA | Grendene vs. Energisa SA | Grendene vs. Clave Indices 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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