Correlation Between Carvana and Companhia Siderurgica

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

By analyzing existing cross correlation between Carvana Co and Companhia Siderurgica Nacional, you can compare the effects of market volatilities on Carvana and Companhia Siderurgica 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 Carvana with a short position of Companhia Siderurgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carvana and Companhia Siderurgica.

Diversification Opportunities for Carvana and Companhia Siderurgica

-0.55

Correlation Coefficient

Carvana  Companhia Siderurgica

Excellent diversification

The 3 months correlation between Carvana and Companhia is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Carvana Co and Companhia Siderurgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderurgica and Carvana 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 Carvana Co are associated (or correlated) with Companhia Siderurgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Siderurgica has no effect on the direction of Carvana i.e., Carvana and Companhia Siderurgica go up and down completely randomly.

Pair Corralation between Carvana and Companhia Siderurgica

Given the investment horizon of 90 days Carvana Co is expected to generate 1.14 times more return on investment than Companhia Siderurgica. However, Carvana is 1.14 times more volatile than Companhia Siderurgica Nacional. It trades about 0.15 of its potential returns per unit of risk. Companhia Siderurgica Nacional is currently generating about -0.09 per unit of risk. If you would invest  25,917  in Carvana Co on May 7, 2025 and sell it today you would earn a total of  9,157  from holding Carvana Co or generate 35.33% return on investment over 90 days.

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

Carvana Co  vs.  Companhia Siderurgica Nacional

Carvana

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carvana Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Carvana sustained solid returns over the last few months and may actually be approaching a breakup point.

Companhia Siderurgica

Risk-Adjusted Performance

Weakest

Over the last 90 days Companhia Siderurgica Nacional has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Carvana and Companhia Siderurgica

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

The idea behind Carvana Co and Companhia Siderurgica Nacional 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.