Correlation Between Vale SA and Bolsas Y
Can any of the company-specific risk be diversified away by investing in both Vale SA and Bolsas Y 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 Vale SA and Bolsas Y into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vale SA and Bolsas y Mercados, you can compare the effects of market volatilities on Vale SA and Bolsas Y 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 Vale SA with a short position of Bolsas Y. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale SA and Bolsas Y.
Diversification Opportunities for Vale SA and Bolsas Y
Pay attention - limited upside
The 3 months correlation between Vale and Bolsas is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA and Bolsas y Mercados in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolsas y Mercados and Vale SA 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 Vale SA are associated (or correlated) with Bolsas Y. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolsas y Mercados has no effect on the direction of Vale SA i.e., Vale SA and Bolsas Y go up and down completely randomly.
Pair Corralation between Vale SA and Bolsas Y
Assuming the 90 days trading horizon Vale SA is expected to generate 0.32 times more return on investment than Bolsas Y. However, Vale SA is 3.11 times less risky than Bolsas Y. It trades about -0.06 of its potential returns per unit of risk. Bolsas y Mercados is currently generating about -0.06 per unit of risk. If you would invest 647,300 in Vale SA on September 18, 2024 and sell it today you would lose (135,300) from holding Vale SA or give up 20.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vale SA vs. Bolsas y Mercados
Performance |
| Timeline |
| Vale SA |
| Bolsas y Mercados |
Vale SA and Bolsas Y Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale SA and Bolsas Y
The main advantage of trading using opposite Vale SA and Bolsas Y positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale SA position performs unexpectedly, Bolsas Y 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 Bolsas Y will offset losses from the drop in Bolsas Y's long position.| Vale SA vs. BHP Group Limited | Vale SA vs. Rio Tinto PLC | Vale SA vs. Edesa Holding SA | Vale SA vs. Longvie SA |
| Bolsas Y vs. Edesa Holding SA | Bolsas Y vs. Longvie SA | Bolsas Y vs. Vista Energy, SAB | Bolsas Y vs. American Express Co |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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