Correlation Between WEG SA and Bardella

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

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

Diversification Opportunities for WEG SA and Bardella

0.23

Correlation Coefficient

WEG SA  Bardella

Modest diversification

The 3 months correlation between WEG and Bardella is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding WEG SA and Bardella SA Indstrias in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bardella SA Indstrias and WEG 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 WEG SA are associated (or correlated) with Bardella. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bardella SA Indstrias has no effect on the direction of WEG SA i.e., WEG SA and Bardella go up and down completely randomly.

Pair Corralation between WEG SA and Bardella

Assuming the 90 days trading horizon WEG SA is expected to generate 17.95 times less return on investment than Bardella. But when comparing it to its historical volatility, WEG SA is 6.53 times less risky than Bardella. It trades about 0.11 of its potential returns per unit of risk. Bardella SA Indstrias is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  705.00  in Bardella SA Indstrias on February 3, 2024 and sell it today you would earn a total of  346.00  from holding Bardella SA Indstrias or generate 49.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

WEG SA  vs.  Bardella SA Indstrias

WEG SA

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WEG SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, WEG SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bardella SA Indstrias

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bardella SA Indstrias are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bardella unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WEG SA and Bardella

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

The idea behind WEG SA and Bardella SA Indstrias 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.