Correlation Between Metalurgica Gerdau and Exxon Mobil

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

Diversification Opportunities for Metalurgica Gerdau and Exxon Mobil

0.74

Correlation Coefficient

Metalurgica Gerdau  Exxon Mobil

Poor diversification

The 3 months correlation between Metalurgica and Exxon is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Metalurgica Gerdau SA and Exxon Mobil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil 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 Exxon Mobil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil has no effect on the direction of Metalurgica Gerdau i.e., Metalurgica Gerdau and Exxon Mobil go up and down completely randomly.

Pair Corralation between Metalurgica Gerdau and Exxon Mobil

Assuming the 90 days trading horizon Metalurgica Gerdau SA is expected to under-perform the Exxon Mobil. In addition to that, Metalurgica Gerdau is 1.58 times more volatile than Exxon Mobil. It trades about -0.16 of its total potential returns per unit of risk. Exxon Mobil is currently generating about 0.19 per unit of volatility. If you would invest  7,774  in Exxon Mobil on December 5, 2024 and sell it today you would earn a total of  390.00  from holding Exxon Mobil or generate 5.02% return on investment over 90 days.

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

Metalurgica Gerdau SA  vs.  Exxon Mobil

Metalurgica Gerdau

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Exxon Mobil

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exxon Mobil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Exxon Mobil is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Metalurgica Gerdau and Exxon Mobil

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

The idea behind Metalurgica Gerdau SA and Exxon Mobil 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..