Correlation Between Nucor and Lavvi Empreendimentos

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

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

Diversification Opportunities for Nucor and Lavvi Empreendimentos

0.64

Correlation Coefficient

Nucor  Lavvi Empreendimentos

Poor diversification

The 3 months correlation between Nucor and Lavvi is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Nucor and Lavvi Empreendimentos Imobilir in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lavvi Empreendimentos and Nucor 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 Nucor are associated (or correlated) with Lavvi Empreendimentos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lavvi Empreendimentos has no effect on the direction of Nucor i.e., Nucor and Lavvi Empreendimentos go up and down completely randomly.

Pair Corralation between Nucor and Lavvi Empreendimentos

Assuming the 90 days trading horizon Nucor is expected to under-perform the Lavvi Empreendimentos. In addition to that, Nucor is 1.58 times more volatile than Lavvi Empreendimentos Imobilirios. It trades about -0.31 of its total potential returns per unit of risk. Lavvi Empreendimentos Imobilirios is currently generating about -0.34 per unit of volatility. If you would invest  812.00  in Lavvi Empreendimentos Imobilirios on October 11, 2024 and sell it today you would lose (92.00) from holding Lavvi Empreendimentos Imobilirios or give up 11.33% of portfolio value over 90 days.

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

Nucor  vs.  Lavvi Empreendimentos Imobilir

Nucor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nucor 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 basic 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.

Lavvi Empreendimentos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lavvi Empreendimentos Imobilirios 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 Nucor and Lavvi Empreendimentos

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

The idea behind Nucor and Lavvi Empreendimentos Imobilirios 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.