Correlation Between Lojas Renner and JBS SA
Can any of the company-specific risk be diversified away by investing in both Lojas Renner and JBS SA 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 JBS SA 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 JBS SA, you can compare the effects of market volatilities on Lojas Renner and JBS SA 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 JBS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lojas Renner and JBS SA.
Diversification Opportunities for Lojas Renner and JBS SA
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lojas and JBS is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lojas Renner SA and JBS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS 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 JBS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS SA has no effect on the direction of Lojas Renner i.e., Lojas Renner and JBS SA go up and down completely randomly.
Pair Corralation between Lojas Renner and JBS SA
Assuming the 90 days trading horizon Lojas Renner SA is expected to generate 1.79 times more return on investment than JBS SA. However, Lojas Renner is 1.79 times more volatile than JBS SA. It trades about -0.02 of its potential returns per unit of risk. JBS SA is currently generating about -0.39 per unit of risk. If you would invest 1,308 in Lojas Renner SA on October 15, 2024 and sell it today you would lose (24.00) from holding Lojas Renner SA or give up 1.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lojas Renner SA vs. JBS SA
Performance |
| Timeline |
| Lojas Renner SA |
| JBS SA |
Lojas Renner and JBS SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lojas Renner and JBS SA
The main advantage of trading using opposite Lojas Renner and JBS SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lojas Renner position performs unexpectedly, JBS SA 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 JBS SA will offset losses from the drop in JBS SA's long position.| Lojas Renner vs. WEG SA | Lojas Renner vs. Localiza Rent a | Lojas Renner vs. Raia Drogasil SA | Lojas Renner vs. Ambev 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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