Correlation Between United States and Cresud Wnt

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

By analyzing existing cross correlation between United States Steel and Cresud Wnt, you can compare the effects of market volatilities on United States and Cresud Wnt 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 United States with a short position of Cresud Wnt. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Cresud Wnt.

Diversification Opportunities for United States and Cresud Wnt

-0.77

Correlation Coefficient

United States  Cresud Wnt

Pay attention - limited upside

The 3 months correlation between United and Cresud is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Cresud Wnt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresud Wnt and United States 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 United States Steel are associated (or correlated) with Cresud Wnt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresud Wnt has no effect on the direction of United States i.e., United States and Cresud Wnt go up and down completely randomly.

Pair Corralation between United States and Cresud Wnt

Given the investment horizon of 90 days United States Steel is expected to under-perform the Cresud Wnt. But the stock apears to be less risky and, when comparing its historical volatility, United States Steel is 1.19 times less risky than Cresud Wnt. The stock trades about -0.03 of its potential returns per unit of risk. The Cresud Wnt is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  69,000  in Cresud Wnt on October 9, 2024 and sell it today you would earn a total of  62,500  from holding Cresud Wnt or generate 90.58% return on investment over 90 days.

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

United States Steel  vs.  Cresud Wnt

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cresud Wnt

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cresud Wnt are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Cresud Wnt sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United States and Cresud Wnt

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

The idea behind United States Steel and Cresud Wnt 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.