Correlation Between Grendene and Localiza Rent
Can any of the company-specific risk be diversified away by investing in both Grendene and Localiza Rent 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 Grendene and Localiza Rent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grendene SA and Localiza Rent a, you can compare the effects of market volatilities on Grendene and Localiza Rent 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 Grendene with a short position of Localiza Rent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grendene and Localiza Rent.
Diversification Opportunities for Grendene and Localiza Rent
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Grendene and Localiza is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Grendene SA and Localiza Rent a in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Localiza Rent a and Grendene 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 Grendene SA are associated (or correlated) with Localiza Rent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Localiza Rent a has no effect on the direction of Grendene i.e., Grendene and Localiza Rent go up and down completely randomly.
Pair Corralation between Grendene and Localiza Rent
Assuming the 90 days trading horizon Grendene SA is expected to generate 0.92 times more return on investment than Localiza Rent. However, Grendene SA is 1.09 times less risky than Localiza Rent. It trades about 0.02 of its potential returns per unit of risk. Localiza Rent a is currently generating about -0.01 per unit of risk. If you would invest 464.00 in Grendene SA on September 3, 2024 and sell it today you would earn a total of 54.00 from holding Grendene SA or generate 11.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Grendene SA vs. Localiza Rent a
Performance |
| Timeline |
| Grendene SA |
| Localiza Rent a |
Grendene and Localiza Rent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grendene and Localiza Rent
The main advantage of trading using opposite Grendene and Localiza Rent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grendene position performs unexpectedly, Localiza Rent 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 Localiza Rent will offset losses from the drop in Localiza Rent's long position.| Grendene vs. M Dias Branco | Grendene vs. Fleury SA | Grendene vs. Engie Brasil Energia | Grendene vs. Odontoprev SA |
| Localiza Rent vs. Oi SA | Localiza Rent vs. Metalurgica Gerdau SA | Localiza Rent vs. Metalurgica Gerdau SA | Localiza Rent vs. Oi SA |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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