Correlation Between Marcopolo and Gerdau SA
Can any of the company-specific risk be diversified away by investing in both Marcopolo 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 Marcopolo and Gerdau 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 Gerdau SA, you can compare the effects of market volatilities on Marcopolo 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 Marcopolo with a short position of Gerdau SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marcopolo and Gerdau SA.
Diversification Opportunities for Marcopolo and Gerdau SA
Very weak diversification
The 3 months correlation between Marcopolo and Gerdau is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Marcopolo SA and Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerdau 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 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 has no effect on the direction of Marcopolo i.e., Marcopolo and Gerdau SA go up and down completely randomly.
Pair Corralation between Marcopolo and Gerdau SA
Assuming the 90 days trading horizon Marcopolo SA is expected to generate 1.63 times more return on investment than Gerdau SA. However, Marcopolo is 1.63 times more volatile than Gerdau SA. It trades about 0.13 of its potential returns per unit of risk. Gerdau SA is currently generating about 0.0 per unit of risk. If you would invest 165.00 in Marcopolo SA on August 24, 2024 and sell it today you would earn a total of 791.00 from holding Marcopolo SA or generate 479.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.0% |
| Values | Daily Returns |
Marcopolo SA vs. Gerdau SA
Performance |
| Timeline |
| Marcopolo SA |
| Gerdau SA |
Marcopolo and Gerdau SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marcopolo and Gerdau SA
The main advantage of trading using opposite Marcopolo and Gerdau SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marcopolo 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.| Marcopolo vs. Randon SA Implementos | Marcopolo vs. Metalurgica Gerdau SA | Marcopolo vs. CCR SA | Marcopolo vs. Iochpe Maxion SA |
| Gerdau SA vs. Metalurgica Gerdau SA | Gerdau SA vs. Companhia Siderrgica Nacional | Gerdau SA vs. Companhia Energtica de | Gerdau SA vs. Companhia Paranaense 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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