Correlation Between Azul SA and Magazine Luiza
Can any of the company-specific risk be diversified away by investing in both Azul SA and Magazine Luiza 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 Azul SA and Magazine Luiza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Azul SA and Magazine Luiza SA, you can compare the effects of market volatilities on Azul SA and Magazine Luiza 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 Azul SA with a short position of Magazine Luiza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azul SA and Magazine Luiza.
Diversification Opportunities for Azul SA and Magazine Luiza
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Azul and Magazine is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Azul SA and Magazine Luiza SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magazine Luiza SA and Azul 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 Azul SA are associated (or correlated) with Magazine Luiza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magazine Luiza SA has no effect on the direction of Azul SA i.e., Azul SA and Magazine Luiza go up and down completely randomly.
Pair Corralation between Azul SA and Magazine Luiza
Assuming the 90 days trading horizon Azul SA is expected to under-perform the Magazine Luiza. In addition to that, Azul SA is 1.48 times more volatile than Magazine Luiza SA. It trades about -0.05 of its total potential returns per unit of risk. Magazine Luiza SA is currently generating about -0.03 per unit of volatility. If you would invest 1,239 in Magazine Luiza SA on August 28, 2024 and sell it today you would lose (238.00) from holding Magazine Luiza SA or give up 19.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Azul SA vs. Magazine Luiza SA
Performance |
| Timeline |
| Azul SA |
| Magazine Luiza SA |
Azul SA and Magazine Luiza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Azul SA and Magazine Luiza
The main advantage of trading using opposite Azul SA and Magazine Luiza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azul SA position performs unexpectedly, Magazine Luiza 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 Magazine Luiza will offset losses from the drop in Magazine Luiza's long position.| Azul SA vs. Gol Linhas Areas | Azul SA vs. CVC Brasil Operadora | Azul SA vs. Magazine Luiza SA | Azul SA vs. BTG Pactual Logstica |
| Magazine Luiza vs. Baidu Inc | Magazine Luiza vs. Deutsche Bank Aktiengesellschaft | Magazine Luiza vs. HSBC Holdings plc | Magazine Luiza vs. The Bank of |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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