Correlation Between Bank Of and Lojas Renner
Can any of the company-specific risk be diversified away by investing in both Bank Of and Lojas Renner 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 Bank Of and Lojas Renner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Bank of and Lojas Renner SA, you can compare the effects of market volatilities on Bank Of and Lojas Renner 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 Bank Of with a short position of Lojas Renner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Of and Lojas Renner.
Diversification Opportunities for Bank Of and Lojas Renner
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Lojas is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and Lojas Renner SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lojas Renner SA and Bank Of 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 The Bank of are associated (or correlated) with Lojas Renner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lojas Renner SA has no effect on the direction of Bank Of i.e., Bank Of and Lojas Renner go up and down completely randomly.
Pair Corralation between Bank Of and Lojas Renner
Assuming the 90 days trading horizon The Bank of is expected to generate 0.54 times more return on investment than Lojas Renner. However, The Bank of is 1.87 times less risky than Lojas Renner. It trades about 0.33 of its potential returns per unit of risk. Lojas Renner SA is currently generating about -0.04 per unit of risk. If you would invest 36,924 in The Bank of on August 28, 2024 and sell it today you would earn a total of 10,456 from holding The Bank of or generate 28.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Bank of vs. Lojas Renner SA
Performance |
| Timeline |
| The Bank |
| Lojas Renner SA |
Bank Of and Lojas Renner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Of and Lojas Renner
The main advantage of trading using opposite Bank Of and Lojas Renner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Of position performs unexpectedly, Lojas Renner 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 Lojas Renner will offset losses from the drop in Lojas Renner's long position.| Bank Of vs. Fras le SA | Bank Of vs. Clave Indices De | Bank Of vs. BTG Pactual Logstica | Bank Of vs. Telefonaktiebolaget LM Ericsson |
| Lojas Renner vs. Baidu Inc | Lojas Renner vs. Deutsche Bank Aktiengesellschaft | Lojas Renner vs. HSBC Holdings plc | Lojas Renner 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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