Correlation Between Nucor Corp and Gerdau SA
Can any of the company-specific risk be diversified away by investing in both Nucor Corp and Gerdau 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 Nucor Corp and Gerdau SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nucor Corp and Gerdau SA ADR, you can compare the effects of market volatilities on Nucor Corp and Gerdau 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 Nucor Corp with a short position of Gerdau SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nucor Corp and Gerdau SA.
Diversification Opportunities for Nucor Corp and Gerdau SA
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nucor and Gerdau is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nucor Corp and Gerdau SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerdau SA ADR and Nucor Corp 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 Nucor Corp are associated (or correlated) with Gerdau SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gerdau SA ADR has no effect on the direction of Nucor Corp i.e., Nucor Corp and Gerdau SA go up and down completely randomly.
Pair Corralation between Nucor Corp and Gerdau SA
Considering the 90-day investment horizon Nucor Corp is expected to generate 0.81 times more return on investment than Gerdau SA. However, Nucor Corp is 1.23 times less risky than Gerdau SA. It trades about 0.34 of its potential returns per unit of risk. Gerdau SA ADR is currently generating about 0.1 per unit of risk. If you would invest 11,448 in Nucor Corp on November 2, 2024 and sell it today you would earn a total of 1,420 from holding Nucor Corp or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nucor Corp vs. Gerdau SA ADR
Performance |
| Timeline |
| Nucor Corp |
| Gerdau SA ADR |
Nucor Corp and Gerdau SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nucor Corp and Gerdau SA
The main advantage of trading using opposite Nucor Corp and Gerdau SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nucor Corp position performs unexpectedly, Gerdau 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 Gerdau SA will offset losses from the drop in Gerdau SA's long position.| Nucor Corp vs. Agnico Eagle Mines | Nucor Corp vs. Pan American Silver | Nucor Corp vs. Kinross Gold | Nucor Corp vs. Newmont Goldcorp Corp |
| Gerdau SA vs. Usinas Siderurgicas de | Gerdau SA vs. Ternium SA ADR | Gerdau SA vs. ArcelorMittal SA ADR | Gerdau SA vs. POSCO Holdings |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |