Correlation Between El Puerto and Lojas Renner
Can any of the company-specific risk be diversified away by investing in both El Puerto 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 El Puerto and Lojas Renner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between El Puerto de and Lojas Renner SA, you can compare the effects of market volatilities on El Puerto 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 El Puerto with a short position of Lojas Renner. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Puerto and Lojas Renner.
Diversification Opportunities for El Puerto and Lojas Renner
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ELPQF and Lojas is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding El Puerto de 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 El Puerto 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 El Puerto de 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 El Puerto i.e., El Puerto and Lojas Renner go up and down completely randomly.
Pair Corralation between El Puerto and Lojas Renner
Assuming the 90 days horizon El Puerto is expected to generate 2.26 times less return on investment than Lojas Renner. But when comparing it to its historical volatility, El Puerto de is 1.29 times less risky than Lojas Renner. It trades about 0.01 of its potential returns per unit of risk. Lojas Renner SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 411.00 in Lojas Renner SA on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Lojas Renner SA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 50.0% |
| Values | Daily Returns |
El Puerto de vs. Lojas Renner SA
Performance |
| Timeline |
| El Puerto de |
| Lojas Renner SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
El Puerto and Lojas Renner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Puerto and Lojas Renner
The main advantage of trading using opposite El Puerto and Lojas Renner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Puerto 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.The idea behind El Puerto de and Lojas Renner SA 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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