Correlation Between MercadoLibre and Lojas Quero
Can any of the company-specific risk be diversified away by investing in both MercadoLibre and Lojas Quero 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 MercadoLibre and Lojas Quero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MercadoLibre and Lojas Quero Quero SA, you can compare the effects of market volatilities on MercadoLibre and Lojas Quero 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 MercadoLibre with a short position of Lojas Quero. Check out your portfolio center. Please also check ongoing floating volatility patterns of MercadoLibre and Lojas Quero.
Diversification Opportunities for MercadoLibre and Lojas Quero
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MercadoLibre and Lojas is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding MercadoLibre and Lojas Quero Quero SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lojas Quero Quero and MercadoLibre 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 MercadoLibre are associated (or correlated) with Lojas Quero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lojas Quero Quero has no effect on the direction of MercadoLibre i.e., MercadoLibre and Lojas Quero go up and down completely randomly.
Pair Corralation between MercadoLibre and Lojas Quero
Assuming the 90 days trading horizon MercadoLibre is expected to generate 0.7 times more return on investment than Lojas Quero. However, MercadoLibre is 1.43 times less risky than Lojas Quero. It trades about 0.02 of its potential returns per unit of risk. Lojas Quero Quero SA is currently generating about -0.14 per unit of risk. If you would invest 9,334 in MercadoLibre on November 2, 2024 and sell it today you would earn a total of 229.00 from holding MercadoLibre or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.03% |
| Values | Daily Returns |
MercadoLibre vs. Lojas Quero Quero SA
Performance |
| Timeline |
| MercadoLibre |
| Lojas Quero Quero |
MercadoLibre and Lojas Quero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MercadoLibre and Lojas Quero
The main advantage of trading using opposite MercadoLibre and Lojas Quero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MercadoLibre position performs unexpectedly, Lojas Quero 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 Lojas Quero will offset losses from the drop in Lojas Quero's long position.| MercadoLibre vs. Lloyds Banking Group | MercadoLibre vs. Jefferies Financial Group | MercadoLibre vs. Capital One Financial | MercadoLibre vs. United States Steel |
| Lojas Quero vs. Mobly SA | Lojas Quero vs. Enjoei SA | Lojas Quero vs. Bemobi Mobile Tech | Lojas Quero vs. MPM Corpreos 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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