Correlation Between Lowes Companies and ATRenew
Can any of the company-specific risk be diversified away by investing in both Lowes Companies and ATRenew 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 Lowes Companies and ATRenew into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lowes Companies and ATRenew Inc DRC, you can compare the effects of market volatilities on Lowes Companies and ATRenew 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 Lowes Companies with a short position of ATRenew. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lowes Companies and ATRenew.
Diversification Opportunities for Lowes Companies and ATRenew
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lowes and ATRenew is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lowes Companies and ATRenew Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRenew Inc DRC and Lowes Companies 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 Lowes Companies are associated (or correlated) with ATRenew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRenew Inc DRC has no effect on the direction of Lowes Companies i.e., Lowes Companies and ATRenew go up and down completely randomly.
Pair Corralation between Lowes Companies and ATRenew
Considering the 90-day investment horizon Lowes Companies is expected to generate 2.07 times less return on investment than ATRenew. But when comparing it to its historical volatility, Lowes Companies is 3.23 times less risky than ATRenew. It trades about 0.06 of its potential returns per unit of risk. ATRenew Inc DRC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 259.00 in ATRenew Inc DRC on August 30, 2024 and sell it today you would earn a total of 85.00 from holding ATRenew Inc DRC or generate 32.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lowes Companies vs. ATRenew Inc DRC
Performance |
| Timeline |
| Lowes Companies |
| ATRenew Inc DRC |
Lowes Companies and ATRenew Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lowes Companies and ATRenew
The main advantage of trading using opposite Lowes Companies and ATRenew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lowes Companies position performs unexpectedly, ATRenew 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 ATRenew will offset losses from the drop in ATRenew's long position.| Lowes Companies vs. Floor Decor Holdings | Lowes Companies vs. Arhaus Inc | Lowes Companies vs. Haverty Furniture Companies | Lowes Companies vs. Home Depot |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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