Correlation Between Lojas Renner and CA Modas
Can any of the company-specific risk be diversified away by investing in both Lojas Renner and CA Modas 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 Lojas Renner and CA Modas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lojas Renner SA and CA Modas SA, you can compare the effects of market volatilities on Lojas Renner and CA Modas 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 Lojas Renner with a short position of CA Modas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lojas Renner and CA Modas.
Diversification Opportunities for Lojas Renner and CA Modas
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lojas and CEAB3 is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Lojas Renner SA and CA Modas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CA Modas SA and Lojas Renner 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 Lojas Renner SA are associated (or correlated) with CA Modas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CA Modas SA has no effect on the direction of Lojas Renner i.e., Lojas Renner and CA Modas go up and down completely randomly.
Pair Corralation between Lojas Renner and CA Modas
Assuming the 90 days trading horizon Lojas Renner SA is expected to under-perform the CA Modas. But the stock apears to be less risky and, when comparing its historical volatility, Lojas Renner SA is 1.51 times less risky than CA Modas. The stock trades about -0.01 of its potential returns per unit of risk. The CA Modas SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 475.00 in CA Modas SA on August 31, 2024 and sell it today you would earn a total of 582.00 from holding CA Modas SA or generate 122.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.94% |
| Values | Daily Returns |
Lojas Renner SA vs. CA Modas SA
Performance |
| Timeline |
| Lojas Renner SA |
| CA Modas SA |
Lojas Renner and CA Modas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lojas Renner and CA Modas
The main advantage of trading using opposite Lojas Renner and CA Modas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lojas Renner position performs unexpectedly, CA Modas 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 CA Modas will offset losses from the drop in CA Modas' long position.| Lojas Renner vs. Engie Brasil Energia | Lojas Renner vs. Fras le SA | Lojas Renner vs. Energisa SA | Lojas Renner vs. Clave Indices De |
| CA Modas vs. Marisa Lojas SA | CA Modas vs. Vivara Participaes SA | CA Modas vs. Guararapes Confeces SA | CA Modas vs. Atacado 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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