Correlation Between Energisa and Lojas Renner
Can any of the company-specific risk be diversified away by investing in both Energisa 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 Energisa and Lojas Renner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and Lojas Renner SA, you can compare the effects of market volatilities on Energisa 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 Energisa with a short position of Lojas Renner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Lojas Renner.
Diversification Opportunities for Energisa and Lojas Renner
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Energisa and Lojas is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA 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 Energisa 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 Energisa SA 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 Energisa i.e., Energisa and Lojas Renner go up and down completely randomly.
Pair Corralation between Energisa and Lojas Renner
Assuming the 90 days trading horizon Energisa SA is expected to under-perform the Lojas Renner. But the stock apears to be less risky and, when comparing its historical volatility, Energisa SA is 1.75 times less risky than Lojas Renner. The stock trades about -0.07 of its potential returns per unit of risk. The Lojas Renner SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,155 in Lojas Renner SA on August 31, 2024 and sell it today you would earn a total of 351.00 from holding Lojas Renner SA or generate 30.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energisa SA vs. Lojas Renner SA
Performance |
| Timeline |
| Energisa SA |
| Lojas Renner SA |
Energisa and Lojas Renner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and Lojas Renner
The main advantage of trading using opposite Energisa and Lojas Renner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa 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.| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
| Lojas Renner vs. Engie Brasil Energia | Lojas Renner vs. Fras le SA | Lojas Renner vs. Energisa SA | Lojas Renner vs. Clave Indices De |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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