Correlation Between Empresa Distribuidora and Worthington Steel

Can any of the company-specific risk be diversified away by investing in both Empresa Distribuidora and Worthington Steel 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 Empresa Distribuidora and Worthington Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Empresa Distribuidora y and Worthington Steel, you can compare the effects of market volatilities on Empresa Distribuidora and Worthington Steel 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 Empresa Distribuidora with a short position of Worthington Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empresa Distribuidora and Worthington Steel.

Diversification Opportunities for Empresa Distribuidora and Worthington Steel

0.06

Correlation Coefficient

Empresa Distribuidora  Worthington Steel

Significant diversification

The 3 months correlation between Empresa and Worthington is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Empresa Distribuidora y and Worthington Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Steel and Empresa Distribuidora 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 Empresa Distribuidora y are associated (or correlated) with Worthington Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Steel has no effect on the direction of Empresa Distribuidora i.e., Empresa Distribuidora and Worthington Steel go up and down completely randomly.

Pair Corralation between Empresa Distribuidora and Worthington Steel

Considering the 90-day investment horizon Empresa Distribuidora y is expected to under-perform the Worthington Steel. In addition to that, Empresa Distribuidora is 2.43 times more volatile than Worthington Steel. It trades about -0.17 of its total potential returns per unit of risk. Worthington Steel is currently generating about -0.07 per unit of volatility. If you would invest  3,165  in Worthington Steel on October 24, 2024 and sell it today you would lose (106.00) from holding Worthington Steel or give up 3.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Empresa Distribuidora y  vs.  Worthington Steel

Empresa Distribuidora

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Empresa Distribuidora y are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Empresa Distribuidora displayed solid returns over the last few months and may actually be approaching a breakup point.

Worthington Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worthington Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Empresa Distribuidora and Worthington Steel

The main advantage of trading using opposite Empresa Distribuidora and Worthington Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empresa Distribuidora position performs unexpectedly, Worthington Steel 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 Worthington Steel will offset losses from the drop in Worthington Steel's long position.

The idea behind Empresa Distribuidora y and Worthington Steel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.