Correlation Between Gerdau SA and ClearShares Ultra

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

By analyzing existing cross correlation between Gerdau SA ADR and ClearShares Ultra Short Maturity, you can compare the effects of market volatilities on Gerdau SA and ClearShares Ultra 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 Gerdau SA with a short position of ClearShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and ClearShares Ultra.

Diversification Opportunities for Gerdau SA and ClearShares Ultra

0.75

Correlation Coefficient

Gerdau SA  ClearShares Ultra

Poor diversification

The 3 months correlation between Gerdau and ClearShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA ADR and ClearShares Ultra Short Maturi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearShares Ultra Short and Gerdau 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 Gerdau SA ADR are associated (or correlated) with ClearShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearShares Ultra Short has no effect on the direction of Gerdau SA i.e., Gerdau SA and ClearShares Ultra go up and down completely randomly.

Pair Corralation between Gerdau SA and ClearShares Ultra

Considering the 90-day investment horizon Gerdau SA ADR is expected to generate 148.39 times more return on investment than ClearShares Ultra. However, Gerdau SA is 148.39 times more volatile than ClearShares Ultra Short Maturity. It trades about 0.09 of its potential returns per unit of risk. ClearShares Ultra Short Maturity is currently generating about 1.05 per unit of risk. If you would invest  256.00  in Gerdau SA ADR on May 6, 2025 and sell it today you would earn a total of  30.00  from holding Gerdau SA ADR or generate 11.72% return on investment over 90 days.

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

Gerdau SA ADR  vs.  ClearShares Ultra Short Maturi

Gerdau SA ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gerdau SA ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, Gerdau SA sustained solid returns over the last few months and may actually be approaching a breakup point.

ClearShares Ultra Short

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in ClearShares Ultra Short Maturity are ranked lower than 82 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, ClearShares Ultra is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Gerdau SA and ClearShares Ultra

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

The idea behind Gerdau SA ADR and ClearShares Ultra Short Maturity 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.