Correlation Between Companhia Brasileira and Marisa Lojas
Can any of the company-specific risk be diversified away by investing in both Companhia Brasileira and Marisa Lojas 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 Companhia Brasileira and Marisa Lojas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Companhia Brasileira de and Marisa Lojas SA, you can compare the effects of market volatilities on Companhia Brasileira and Marisa Lojas 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 Companhia Brasileira with a short position of Marisa Lojas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Brasileira and Marisa Lojas.
Diversification Opportunities for Companhia Brasileira and Marisa Lojas
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Companhia and Marisa is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Brasileira de and Marisa Lojas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marisa Lojas SA and Companhia Brasileira 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 Companhia Brasileira de are associated (or correlated) with Marisa Lojas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marisa Lojas SA has no effect on the direction of Companhia Brasileira i.e., Companhia Brasileira and Marisa Lojas go up and down completely randomly.
Pair Corralation between Companhia Brasileira and Marisa Lojas
Assuming the 90 days trading horizon Companhia Brasileira de is expected to generate 1.03 times more return on investment than Marisa Lojas. However, Companhia Brasileira is 1.03 times more volatile than Marisa Lojas SA. It trades about -0.07 of its potential returns per unit of risk. Marisa Lojas SA is currently generating about -0.1 per unit of risk. If you would invest 309.00 in Companhia Brasileira de on September 2, 2024 and sell it today you would lose (45.00) from holding Companhia Brasileira de or give up 14.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Companhia Brasileira de vs. Marisa Lojas SA
Performance |
| Timeline |
| Companhia Brasileira |
| Marisa Lojas SA |
Companhia Brasileira and Marisa Lojas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Companhia Brasileira and Marisa Lojas
The main advantage of trading using opposite Companhia Brasileira and Marisa Lojas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Brasileira position performs unexpectedly, Marisa Lojas 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 Marisa Lojas will offset losses from the drop in Marisa Lojas' long position.| Companhia Brasileira vs. Atacado SA | Companhia Brasileira vs. Sendas Distribuidora SA | Companhia Brasileira vs. Natura Co Holding | Companhia Brasileira vs. Lojas Renner SA |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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