Correlation Between NYSE Composite and Localiza Rent
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Localiza Rent 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 NYSE Composite and Localiza Rent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Localiza Rent A, you can compare the effects of market volatilities on NYSE Composite and Localiza Rent 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 NYSE Composite with a short position of Localiza Rent. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Localiza Rent.
Diversification Opportunities for NYSE Composite and Localiza Rent
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between NYSE and Localiza is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Localiza Rent A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Localiza Rent A and NYSE Composite 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 NYSE Composite are associated (or correlated) with Localiza Rent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Localiza Rent A has no effect on the direction of NYSE Composite i.e., NYSE Composite and Localiza Rent go up and down completely randomly.
Pair Corralation between NYSE Composite and Localiza Rent
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.22 times more return on investment than Localiza Rent. However, NYSE Composite is 4.54 times less risky than Localiza Rent. It trades about 0.24 of its potential returns per unit of risk. Localiza Rent A is currently generating about 0.04 per unit of risk. If you would invest 1,954,967 in NYSE Composite on August 28, 2024 and sell it today you would earn a total of 67,069 from holding NYSE Composite or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Localiza Rent A
Performance |
| Timeline |
NYSE Composite and Localiza Rent Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Localiza Rent A
Pair trading matchups for Localiza Rent
Pair Trading with NYSE Composite and Localiza Rent
The main advantage of trading using opposite NYSE Composite and Localiza Rent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Localiza Rent 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 Localiza Rent will offset losses from the drop in Localiza Rent's long position.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| Localiza Rent vs. Hypera SA | Localiza Rent vs. Raia Drogasil SA | Localiza Rent vs. BB Seguridade Participacoes | Localiza Rent vs. Equatorial Energia 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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