Correlation Between Metalurgica Gerdau and DICKS Sporting

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

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

Diversification Opportunities for Metalurgica Gerdau and DICKS Sporting

-0.4

Correlation Coefficient

Metalurgica Gerdau  DICKS Sporting

Very good diversification

The 3 months correlation between Metalurgica and DICKS is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and DICKS Sporting Goods, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DICKS Sporting Goods, and Metalurgica Gerdau 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 Metalurgica Gerdau SA are associated (or correlated) with DICKS Sporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DICKS Sporting Goods, has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and DICKS Sporting go up and down completely randomly.

Pair Corralation between Metalurgica Gerdau and DICKS Sporting

If you would invest  13,827  in DICKS Sporting Goods, on October 22, 2024 and sell it today you would earn a total of  0.00  from holding DICKS Sporting Goods, or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	11.76%
Values	Daily Returns

Metalurgica Gerdau SA  vs.  DICKS Sporting Goods,

Metalurgica Gerdau

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metalurgica Gerdau SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Metalurgica Gerdau is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

DICKS Sporting Goods,

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days DICKS Sporting Goods, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak forward-looking signals, DICKS Sporting sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metalurgica Gerdau and DICKS Sporting

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

The idea behind Metalurgica Gerdau SA and DICKS Sporting Goods, 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.