Correlation Between Vale SA and Capital Growth

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

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

Diversification Opportunities for Vale SA and Capital Growth

0.56

Correlation Coefficient

Vale SA  Capital Growth

Very weak diversification

The 3 months correlation between Vale and Capital is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA ADR and Capital Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Growth and Vale 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 Vale SA ADR are associated (or correlated) with Capital Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Growth has no effect on the direction of Vale SA i.e., Vale SA and Capital Growth go up and down completely randomly.

Pair Corralation between Vale SA and Capital Growth

Given the investment horizon of 90 days Vale SA is expected to generate 3.66 times less return on investment than Capital Growth. In addition to that, Vale SA is 1.48 times more volatile than Capital Growth Fund. It trades about 0.01 of its total potential returns per unit of risk. Capital Growth Fund is currently generating about 0.04 per unit of volatility. If you would invest  1,203  in Capital Growth Fund on May 6, 2025 and sell it today you would earn a total of  163.00  from holding Capital Growth Fund or generate 13.55% return on investment over 90 days.

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

Vale SA ADR  vs.  Capital Growth Fund

Vale SA ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vale SA ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Vale SA is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Capital Growth

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Growth Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Capital Growth may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Vale SA and Capital Growth

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

The idea behind Vale SA ADR and Capital Growth Fund 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.