Correlation Between Marcopolo and M Dias

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

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

Diversification Opportunities for Marcopolo and M Dias

-0.02

Correlation Coefficient

Marcopolo  M Dias

Good diversification

The 3 months correlation between Marcopolo and MDIA3 is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Marcopolo SA and M Dias Branco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Dias Branco and Marcopolo 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 Marcopolo SA are associated (or correlated) with M Dias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Dias Branco has no effect on the direction of Marcopolo i.e., Marcopolo and M Dias go up and down completely randomly.

Pair Corralation between Marcopolo and M Dias

Assuming the 90 days trading horizon Marcopolo SA is expected to generate 0.94 times more return on investment than M Dias. However, Marcopolo SA is 1.06 times less risky than M Dias. It trades about -0.05 of its potential returns per unit of risk. M Dias Branco is currently generating about -0.11 per unit of risk. If you would invest  597.00  in Marcopolo SA on September 26, 2024 and sell it today you would lose (57.00) from holding Marcopolo SA or give up 9.55% of portfolio value over 90 days.

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

Marcopolo SA  vs.  M Dias Branco

Marcopolo SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marcopolo SA 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.

M Dias Branco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days M Dias Branco 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 Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Marcopolo and M Dias

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

The idea behind Marcopolo SA and M Dias Branco 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.