Correlation Between Lojas Renner and Equatorial Energia
Can any of the company-specific risk be diversified away by investing in both Lojas Renner and Equatorial Energia 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 Equatorial Energia 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 Equatorial Energia SA, you can compare the effects of market volatilities on Lojas Renner and Equatorial Energia 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 Equatorial Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lojas Renner and Equatorial Energia.
Diversification Opportunities for Lojas Renner and Equatorial Energia
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lojas and Equatorial is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lojas Renner SA and Equatorial Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equatorial Energia 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 Equatorial Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equatorial Energia has no effect on the direction of Lojas Renner i.e., Lojas Renner and Equatorial Energia go up and down completely randomly.
Pair Corralation between Lojas Renner and Equatorial Energia
Assuming the 90 days trading horizon Lojas Renner SA is expected to under-perform the Equatorial Energia. In addition to that, Lojas Renner is 1.51 times more volatile than Equatorial Energia SA. It trades about -0.27 of its total potential returns per unit of risk. Equatorial Energia SA is currently generating about 0.13 per unit of volatility. If you would invest 3,168 in Equatorial Energia SA on August 28, 2024 and sell it today you would earn a total of 122.00 from holding Equatorial Energia SA or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lojas Renner SA vs. Equatorial Energia SA
Performance |
| Timeline |
| Lojas Renner SA |
| Equatorial Energia |
Lojas Renner and Equatorial Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lojas Renner and Equatorial Energia
The main advantage of trading using opposite Lojas Renner and Equatorial Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lojas Renner position performs unexpectedly, Equatorial Energia 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 Equatorial Energia will offset losses from the drop in Equatorial Energia's long position.| Lojas Renner vs. Baidu Inc | Lojas Renner vs. Deutsche Bank Aktiengesellschaft | Lojas Renner vs. HSBC Holdings plc | Lojas Renner vs. The Bank of |
| Equatorial Energia vs. BB Seguridade Participacoes | Equatorial Energia vs. Engie Brasil Energia | Equatorial Energia vs. CTEEP Companhia | Equatorial Energia vs. Itasa Investimentos |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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