Correlation Between Gerdau SA and Tcw Total

Can any of the company-specific risk be diversified away by investing in both Gerdau SA and Tcw Total 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 Tcw Total 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 Tcw Total Return, you can compare the effects of market volatilities on Gerdau SA and Tcw Total 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 Tcw Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gerdau SA and Tcw Total.

Diversification Opportunities for Gerdau SA and Tcw Total

0.5

Correlation Coefficient

Gerdau SA  Tcw Total

Very weak diversification

The 3 months correlation between Gerdau and Tcw is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Gerdau SA ADR and Tcw Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tcw Total Return 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 Tcw Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tcw Total Return has no effect on the direction of Gerdau SA i.e., Gerdau SA and Tcw Total go up and down completely randomly.

Pair Corralation between Gerdau SA and Tcw Total

Considering the 90-day investment horizon Gerdau SA ADR is expected to generate 6.68 times more return on investment than Tcw Total. However, Gerdau SA is 6.68 times more volatile than Tcw Total Return. It trades about 0.11 of its potential returns per unit of risk. Tcw Total Return is currently generating about 0.09 per unit of risk. If you would invest  251.00  in Gerdau SA ADR on May 7, 2025 and sell it today you would earn a total of  41.00  from holding Gerdau SA ADR or generate 16.33% return on investment over 90 days.

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

Gerdau SA ADR  vs.  Tcw Total Return

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 8 (%) 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.

Tcw Total Return

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tcw Total Return are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Tcw Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gerdau SA and Tcw Total

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

The idea behind Gerdau SA ADR and Tcw Total Return 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.