Correlation Between Gerdau SA and FrontView REIT,

Can any of the company-specific risk be diversified away by investing in both Gerdau SA and FrontView REIT, 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 FrontView REIT, 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 FrontView REIT,, you can compare the effects of market volatilities on Gerdau SA and FrontView REIT, 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 FrontView REIT,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and FrontView REIT,.

Diversification Opportunities for Gerdau SA and FrontView REIT,

0.27

Correlation Coefficient

Gerdau SA  FrontView REIT,

Modest diversification

The 3 months correlation between Gerdau and FrontView is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA ADR and FrontView REIT, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FrontView REIT, 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 FrontView REIT,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FrontView REIT, has no effect on the direction of Gerdau SA i.e., Gerdau SA and FrontView REIT, go up and down completely randomly.

Pair Corralation between Gerdau SA and FrontView REIT,

Considering the 90-day investment horizon Gerdau SA ADR is expected to under-perform the FrontView REIT,. In addition to that, Gerdau SA is 1.4 times more volatile than FrontView REIT,. It trades about -0.36 of its total potential returns per unit of risk. FrontView REIT, is currently generating about -0.18 per unit of volatility. If you would invest  1,935  in FrontView REIT, on October 4, 2024 and sell it today you would lose (122.00) from holding FrontView REIT, or give up 6.3% of portfolio value over 90 days.

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

Gerdau SA ADR  vs.  FrontView REIT,

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

FrontView REIT,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FrontView REIT, has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, FrontView REIT, is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Gerdau SA and FrontView REIT,

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

The idea behind Gerdau SA ADR and FrontView REIT, 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.