Correlation Between Under Armour and Gerdau SA
Can any of the company-specific risk be diversified away by investing in both Under Armour 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 Under Armour and Gerdau SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Under Armour and Gerdau SA, you can compare the effects of market volatilities on Under Armour 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 Under Armour with a short position of Gerdau SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Under Armour and Gerdau SA.
Diversification Opportunities for Under Armour and Gerdau SA
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Under and Gerdau is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour and Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerdau SA and Under Armour 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 Under Armour 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 Under Armour i.e., Under Armour and Gerdau SA go up and down completely randomly.
Pair Corralation between Under Armour and Gerdau SA
Assuming the 90 days trading horizon Under Armour is expected to generate 3.14 times more return on investment than Gerdau SA. However, Under Armour is 3.14 times more volatile than Gerdau SA. It trades about 0.06 of its potential returns per unit of risk. Gerdau SA is currently generating about 0.04 per unit of risk. If you would invest 3,700 in Under Armour on September 28, 2024 and sell it today you would earn a total of 1,010 from holding Under Armour or generate 27.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Under Armour vs. Gerdau SA
Performance |
| Timeline |
| Under Armour |
| Gerdau SA |
Under Armour and Gerdau SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Under Armour and Gerdau SA
The main advantage of trading using opposite Under Armour and Gerdau SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour 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.| Under Armour vs. Nordon Indstrias Metalrgicas | Under Armour vs. Metalurgica Gerdau SA | Under Armour vs. Paycom Software | Under Armour vs. SVB Financial Group |
| Gerdau SA vs. Companhia Siderrgica Nacional | Gerdau SA vs. Banco Bradesco SA | Gerdau SA vs. Vale SA | Gerdau SA vs. Petrleo Brasileiro 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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