Correlation Between Companhia Siderurgica and Mesabi Trust
Can any of the company-specific risk be diversified away by investing in both Companhia Siderurgica and Mesabi Trust 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 Companhia Siderurgica and Mesabi Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Siderurgica Nacional and Mesabi Trust, you can compare the effects of market volatilities on Companhia Siderurgica and Mesabi Trust 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 Companhia Siderurgica with a short position of Mesabi Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Siderurgica and Mesabi Trust.
Diversification Opportunities for Companhia Siderurgica and Mesabi Trust
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Companhia and Mesabi is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Siderurgica Nacional and Mesabi Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesabi Trust and Companhia Siderurgica 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 Companhia Siderurgica Nacional are associated (or correlated) with Mesabi Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesabi Trust has no effect on the direction of Companhia Siderurgica i.e., Companhia Siderurgica and Mesabi Trust go up and down completely randomly.
Pair Corralation between Companhia Siderurgica and Mesabi Trust
Considering the 90-day investment horizon Companhia Siderurgica Nacional is expected to under-perform the Mesabi Trust. In addition to that, Companhia Siderurgica is 1.37 times more volatile than Mesabi Trust. It trades about -0.04 of its total potential returns per unit of risk. Mesabi Trust is currently generating about 0.34 per unit of volatility. If you would invest 2,383 in Mesabi Trust on August 31, 2024 and sell it today you would earn a total of 370.00 from holding Mesabi Trust or generate 15.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Siderurgica Nacional vs. Mesabi Trust
Performance |
| Timeline |
| Companhia Siderurgica |
| Mesabi Trust |
Companhia Siderurgica and Mesabi Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Siderurgica and Mesabi Trust
The main advantage of trading using opposite Companhia Siderurgica and Mesabi Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Siderurgica position performs unexpectedly, Mesabi Trust 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 Mesabi Trust will offset losses from the drop in Mesabi Trust's long position.| Companhia Siderurgica vs. Nucor Corp | Companhia Siderurgica vs. Steel Dynamics | Companhia Siderurgica vs. ArcelorMittal SA ADR | Companhia Siderurgica vs. Gerdau SA ADR |
| Mesabi Trust vs. Olympic Steel | Mesabi Trust vs. Universal Stainless Alloy | Mesabi Trust vs. POSCO Holdings | Mesabi Trust vs. Outokumpu Oyj ADR |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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