Correlation Between Magazine Luiza and WEG SA
Can any of the company-specific risk be diversified away by investing in both Magazine Luiza and WEG 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 Magazine Luiza and WEG SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magazine Luiza SA and WEG SA, you can compare the effects of market volatilities on Magazine Luiza and WEG 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 Magazine Luiza with a short position of WEG SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magazine Luiza and WEG SA.
Diversification Opportunities for Magazine Luiza and WEG SA
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Magazine and WEG is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Magazine Luiza SA and WEG SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEG SA and Magazine Luiza 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 Magazine Luiza SA are associated (or correlated) with WEG SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEG SA has no effect on the direction of Magazine Luiza i.e., Magazine Luiza and WEG SA go up and down completely randomly.
Pair Corralation between Magazine Luiza and WEG SA
Assuming the 90 days trading horizon Magazine Luiza SA is expected to generate 25.5 times more return on investment than WEG SA. However, Magazine Luiza is 25.5 times more volatile than WEG SA. It trades about 0.04 of its potential returns per unit of risk. WEG SA is currently generating about 0.06 per unit of risk. If you would invest 3,080 in Magazine Luiza SA on August 26, 2024 and sell it today you would lose (2,138) from holding Magazine Luiza SA or give up 69.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magazine Luiza SA vs. WEG SA
Performance |
| Timeline |
| Magazine Luiza SA |
| WEG SA |
Magazine Luiza and WEG SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magazine Luiza and WEG SA
The main advantage of trading using opposite Magazine Luiza and WEG SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magazine Luiza position performs unexpectedly, WEG 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 WEG SA will offset losses from the drop in WEG SA's long position.| Magazine Luiza vs. Baidu Inc | Magazine Luiza vs. Deutsche Bank Aktiengesellschaft | Magazine Luiza vs. HSBC Holdings plc | Magazine Luiza vs. The Bank of |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |