Correlation Between Marcopolo and Eternit SA
Can any of the company-specific risk be diversified away by investing in both Marcopolo and Eternit 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 Eternit 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 Eternit SA, you can compare the effects of market volatilities on Marcopolo and Eternit 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 Eternit SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marcopolo and Eternit SA.
Diversification Opportunities for Marcopolo and Eternit SA
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Marcopolo and Eternit is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Marcopolo SA and Eternit SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eternit 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 Eternit SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eternit SA has no effect on the direction of Marcopolo i.e., Marcopolo and Eternit SA go up and down completely randomly.
Pair Corralation between Marcopolo and Eternit SA
Assuming the 90 days trading horizon Marcopolo SA is expected to generate 1.93 times more return on investment than Eternit SA. However, Marcopolo is 1.93 times more volatile than Eternit SA. It trades about 0.21 of its potential returns per unit of risk. Eternit SA is currently generating about 0.1 per unit of risk. If you would invest 730.00 in Marcopolo SA on October 24, 2024 and sell it today you would earn a total of 80.00 from holding Marcopolo SA or generate 10.96% 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. Eternit SA
Performance |
| Timeline |
| Marcopolo SA |
| Eternit SA |
Marcopolo and Eternit SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marcopolo and Eternit SA
The main advantage of trading using opposite Marcopolo and Eternit SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marcopolo position performs unexpectedly, Eternit 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 Eternit SA will offset losses from the drop in Eternit SA's long position.| Marcopolo vs. Randon SA Implementos | Marcopolo vs. Metalurgica Gerdau SA | Marcopolo vs. CCR SA | Marcopolo vs. Iochpe Maxion SA |
| Eternit SA vs. Marcopolo SA | Eternit SA vs. Randon SA Implementos | Eternit SA vs. Companhia Siderrgica Nacional | Eternit SA vs. Positivo Tecnologia 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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