Correlation Between Vale SA and Grupo Sports
Can any of the company-specific risk be diversified away by investing in both Vale SA and Grupo Sports 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 Grupo Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vale SA and Grupo Sports World, you can compare the effects of market volatilities on Vale SA and Grupo Sports 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 Grupo Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale SA and Grupo Sports.
Diversification Opportunities for Vale SA and Grupo Sports
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vale and Grupo is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA and Grupo Sports World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Sports World 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 Grupo Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Sports World has no effect on the direction of Vale SA i.e., Vale SA and Grupo Sports go up and down completely randomly.
Pair Corralation between Vale SA and Grupo Sports
Assuming the 90 days trading horizon Vale SA is expected to generate 1.96 times less return on investment than Grupo Sports. In addition to that, Vale SA is 2.63 times more volatile than Grupo Sports World. It trades about 0.02 of its total potential returns per unit of risk. Grupo Sports World is currently generating about 0.08 per unit of volatility. If you would invest 300.00 in Grupo Sports World on September 4, 2024 and sell it today you would earn a total of 338.00 from holding Grupo Sports World or generate 112.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.32% |
| Values | Daily Returns |
Vale SA vs. Grupo Sports World
Performance |
| Timeline |
| Vale SA |
| Grupo Sports World |
Vale SA and Grupo Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale SA and Grupo Sports
The main advantage of trading using opposite Vale SA and Grupo Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale SA position performs unexpectedly, Grupo Sports 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 Grupo Sports will offset losses from the drop in Grupo Sports' long position.| Vale SA vs. Southern Copper | Vale SA vs. Capital One Financial | Vale SA vs. Deutsche Bank Aktiengesellschaft | Vale SA vs. Lloyds Banking Group |
| Grupo Sports vs. McEwen Mining | Grupo Sports vs. Costco Wholesale | Grupo Sports vs. Hoteles City Express | Grupo Sports vs. GMxico Transportes SAB |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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