Correlation Between Cyrela Brazil and Lojas Renner
Can any of the company-specific risk be diversified away by investing in both Cyrela Brazil 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 Cyrela Brazil and Lojas Renner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cyrela Brazil Realty and Lojas Renner SA, you can compare the effects of market volatilities on Cyrela Brazil 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 Cyrela Brazil with a short position of Lojas Renner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cyrela Brazil and Lojas Renner.
Diversification Opportunities for Cyrela Brazil and Lojas Renner
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cyrela and Lojas is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cyrela Brazil Realty 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 Cyrela Brazil 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 Cyrela Brazil Realty 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 Cyrela Brazil i.e., Cyrela Brazil and Lojas Renner go up and down completely randomly.
Pair Corralation between Cyrela Brazil and Lojas Renner
Assuming the 90 days trading horizon Cyrela Brazil Realty is expected to generate 0.66 times more return on investment than Lojas Renner. However, Cyrela Brazil Realty is 1.51 times less risky than Lojas Renner. It trades about 0.55 of its potential returns per unit of risk. Lojas Renner SA is currently generating about 0.2 per unit of risk. If you would invest 1,787 in Cyrela Brazil Realty on November 18, 2024 and sell it today you would earn a total of 396.00 from holding Cyrela Brazil Realty or generate 22.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cyrela Brazil Realty vs. Lojas Renner SA
Performance |
| Timeline |
| Cyrela Brazil Realty |
| Lojas Renner SA |
Cyrela Brazil and Lojas Renner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cyrela Brazil and Lojas Renner
The main advantage of trading using opposite Cyrela Brazil and Lojas Renner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cyrela Brazil 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.| Cyrela Brazil vs. MRV Engenharia e | Cyrela Brazil vs. Gafisa SA | Cyrela Brazil vs. Cosan SA | Cyrela Brazil vs. Lojas Renner SA |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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