Correlation Between Gerdau SA and Dayforce

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

By analyzing existing cross correlation between Gerdau SA ADR and Dayforce, you can compare the effects of market volatilities on Gerdau SA and Dayforce 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 Gerdau SA with a short position of Dayforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and Dayforce.

Diversification Opportunities for Gerdau SA and Dayforce

0.59

Correlation Coefficient

Gerdau SA  Dayforce

Very weak diversification

The 3 months correlation between Gerdau and Dayforce is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA ADR and Dayforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dayforce and Gerdau 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 Gerdau SA ADR are associated (or correlated) with Dayforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dayforce has no effect on the direction of Gerdau SA i.e., Gerdau SA and Dayforce go up and down completely randomly.

Pair Corralation between Gerdau SA and Dayforce

Considering the 90-day investment horizon Gerdau SA ADR is expected to generate 1.84 times more return on investment than Dayforce. However, Gerdau SA is 1.84 times more volatile than Dayforce. It trades about -0.14 of its potential returns per unit of risk. Dayforce is currently generating about -0.27 per unit of risk. If you would invest  300.00  in Gerdau SA ADR on October 22, 2024 and sell it today you would lose (17.00) from holding Gerdau SA ADR or give up 5.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Gerdau SA ADR  vs.  Dayforce

Gerdau SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gerdau SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Dayforce

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dayforce are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Dayforce may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gerdau SA and Dayforce

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

The idea behind Gerdau SA ADR and Dayforce 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.