Correlation Between OReilly Automotive and Magazine Luiza
Can any of the company-specific risk be diversified away by investing in both OReilly Automotive and Magazine Luiza 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 OReilly Automotive and Magazine Luiza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OReilly Automotive and Magazine Luiza SA, you can compare the effects of market volatilities on OReilly Automotive and Magazine Luiza 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 OReilly Automotive with a short position of Magazine Luiza. Check out your portfolio center. Please also check ongoing floating volatility patterns of OReilly Automotive and Magazine Luiza.
Diversification Opportunities for OReilly Automotive and Magazine Luiza
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between OReilly and Magazine is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding OReilly Automotive and Magazine Luiza SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magazine Luiza SA and OReilly Automotive 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 OReilly Automotive are associated (or correlated) with Magazine Luiza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magazine Luiza SA has no effect on the direction of OReilly Automotive i.e., OReilly Automotive and Magazine Luiza go up and down completely randomly.
Pair Corralation between OReilly Automotive and Magazine Luiza
Assuming the 90 days trading horizon OReilly Automotive is expected to generate 0.41 times more return on investment than Magazine Luiza. However, OReilly Automotive is 2.46 times less risky than Magazine Luiza. It trades about 0.12 of its potential returns per unit of risk. Magazine Luiza SA is currently generating about -0.17 per unit of risk. If you would invest 2,110 in OReilly Automotive on October 14, 2024 and sell it today you would earn a total of 262.00 from holding OReilly Automotive or generate 12.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OReilly Automotive vs. Magazine Luiza SA
Performance |
| Timeline |
| OReilly Automotive |
| Magazine Luiza SA |
OReilly Automotive and Magazine Luiza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OReilly Automotive and Magazine Luiza
The main advantage of trading using opposite OReilly Automotive and Magazine Luiza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OReilly Automotive position performs unexpectedly, Magazine Luiza 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 Magazine Luiza will offset losses from the drop in Magazine Luiza's long position.| OReilly Automotive vs. Molson Coors Beverage | OReilly Automotive vs. Clover Health Investments, | OReilly Automotive vs. Take Two Interactive Software | OReilly Automotive vs. Monster Beverage |
| Magazine Luiza vs. WEG SA | Magazine Luiza vs. Vale SA | Magazine Luiza vs. Itasa Investimentos | Magazine Luiza vs. Ita Unibanco Holding |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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