Correlation Between Cyrela Brazil and BM European

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

By analyzing existing cross correlation between Cyrela Brazil Realty and BM European Value, you can compare the effects of market volatilities on Cyrela Brazil and BM European 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 Cyrela Brazil with a short position of BM European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cyrela Brazil and BM European.

Diversification Opportunities for Cyrela Brazil and BM European

-0.11

Correlation Coefficient

Cyrela Brazil  BM European

Good diversification

The 3 months correlation between Cyrela and BMRPF is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Cyrela Brazil Realty and BM European Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BM European Value and Cyrela Brazil 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 Cyrela Brazil Realty are associated (or correlated) with BM European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BM European Value has no effect on the direction of Cyrela Brazil i.e., Cyrela Brazil and BM European go up and down completely randomly.

Pair Corralation between Cyrela Brazil and BM European

Assuming the 90 days horizon Cyrela Brazil Realty is expected to generate 0.8 times more return on investment than BM European. However, Cyrela Brazil Realty is 1.25 times less risky than BM European. It trades about -0.02 of its potential returns per unit of risk. BM European Value is currently generating about -0.15 per unit of risk. If you would invest  455.00  in Cyrela Brazil Realty on May 6, 2025 and sell it today you would lose (23.00) from holding Cyrela Brazil Realty or give up 5.05% of portfolio value over 90 days.

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

Cyrela Brazil Realty  vs.  BM European Value

Cyrela Brazil Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cyrela Brazil Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Cyrela Brazil is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BM European Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days BM European Value 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 nearly stable which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Cyrela Brazil and BM European

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

The idea behind Cyrela Brazil Realty and BM European Value 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.