Correlation Between Lowes Companies and BTG Pactual
Can any of the company-specific risk be diversified away by investing in both Lowes Companies and BTG Pactual 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 BTG Pactual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lowes Companies and BTG Pactual Logstica, you can compare the effects of market volatilities on Lowes Companies and BTG Pactual 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 BTG Pactual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lowes Companies and BTG Pactual.
Diversification Opportunities for Lowes Companies and BTG Pactual
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lowes and BTG is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lowes Companies and BTG Pactual Logstica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTG Pactual Logstica 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 BTG Pactual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTG Pactual Logstica has no effect on the direction of Lowes Companies i.e., Lowes Companies and BTG Pactual go up and down completely randomly.
Pair Corralation between Lowes Companies and BTG Pactual
Assuming the 90 days trading horizon Lowes Companies is expected to generate 2.01 times more return on investment than BTG Pactual. However, Lowes Companies is 2.01 times more volatile than BTG Pactual Logstica. It trades about 0.05 of its potential returns per unit of risk. BTG Pactual Logstica is currently generating about 0.01 per unit of risk. If you would invest 5,004 in Lowes Companies on December 4, 2024 and sell it today you would earn a total of 2,231 from holding Lowes Companies or generate 44.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lowes Companies vs. BTG Pactual Logstica
Performance |
| Timeline |
| Lowes Companies |
| BTG Pactual Logstica |
Lowes Companies and BTG Pactual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lowes Companies and BTG Pactual
The main advantage of trading using opposite Lowes Companies and BTG Pactual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lowes Companies position performs unexpectedly, BTG Pactual 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 BTG Pactual will offset losses from the drop in BTG Pactual's long position.| Lowes Companies vs. Uber Technologies | Lowes Companies vs. Liberty Broadband | Lowes Companies vs. Check Point Software | Lowes Companies vs. Take Two Interactive Software |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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