Correlation Between Marcopolo and Bombril SA
Can any of the company-specific risk be diversified away by investing in both Marcopolo and Bombril 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 Marcopolo and Bombril SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marcopolo SA and Bombril SA, you can compare the effects of market volatilities on Marcopolo and Bombril 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 Marcopolo with a short position of Bombril SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marcopolo and Bombril SA.
Diversification Opportunities for Marcopolo and Bombril SA
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Marcopolo and Bombril is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Marcopolo SA and Bombril SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bombril SA and Marcopolo 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 Marcopolo SA are associated (or correlated) with Bombril SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bombril SA has no effect on the direction of Marcopolo i.e., Marcopolo and Bombril SA go up and down completely randomly.
Pair Corralation between Marcopolo and Bombril SA
Assuming the 90 days trading horizon Marcopolo SA is expected to generate 1.05 times more return on investment than Bombril SA. However, Marcopolo is 1.05 times more volatile than Bombril SA. It trades about 0.14 of its potential returns per unit of risk. Bombril SA is currently generating about 0.04 per unit of risk. If you would invest 625.00 in Marcopolo SA on August 30, 2024 and sell it today you would earn a total of 305.00 from holding Marcopolo SA or generate 48.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marcopolo SA vs. Bombril SA
Performance |
| Timeline |
| Marcopolo SA |
| Bombril SA |
Marcopolo and Bombril SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marcopolo and Bombril SA
The main advantage of trading using opposite Marcopolo and Bombril SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marcopolo position performs unexpectedly, Bombril 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 Bombril SA will offset losses from the drop in Bombril SA's long position.| Marcopolo vs. Randon SA Implementos | Marcopolo vs. Metalurgica Gerdau SA | Marcopolo vs. CCR SA | Marcopolo vs. Iochpe Maxion SA |
| Bombril SA vs. Eternit SA | Bombril SA vs. Lupatech SA | Bombril SA vs. Inepar SA Indstria | Bombril SA vs. Marcopolo 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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