Correlation Between Localiza Rent and JBS SA
Can any of the company-specific risk be diversified away by investing in both Localiza Rent and JBS 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 Localiza Rent and JBS SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Localiza Rent a and JBS SA, you can compare the effects of market volatilities on Localiza Rent and JBS 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 Localiza Rent with a short position of JBS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Localiza Rent and JBS SA.
Diversification Opportunities for Localiza Rent and JBS SA
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Localiza and JBS is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Localiza Rent a and JBS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS SA and Localiza Rent 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 Localiza Rent a are associated (or correlated) with JBS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS SA has no effect on the direction of Localiza Rent i.e., Localiza Rent and JBS SA go up and down completely randomly.
Pair Corralation between Localiza Rent and JBS SA
Assuming the 90 days trading horizon Localiza Rent a is expected to under-perform the JBS SA. But the stock apears to be less risky and, when comparing its historical volatility, Localiza Rent a is 1.05 times less risky than JBS SA. The stock trades about -0.02 of its potential returns per unit of risk. The JBS SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,921 in JBS SA on September 26, 2024 and sell it today you would earn a total of 1,800 from holding JBS SA or generate 93.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Localiza Rent a vs. JBS SA
Performance |
| Timeline |
| Localiza Rent a |
| JBS SA |
Localiza Rent and JBS SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Localiza Rent and JBS SA
The main advantage of trading using opposite Localiza Rent and JBS SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Localiza Rent position performs unexpectedly, JBS 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 JBS SA will offset losses from the drop in JBS SA's long position.| Localiza Rent vs. APA Corporation | Localiza Rent vs. Transocean | Localiza Rent vs. Palantir Technologies | Localiza Rent vs. HALI34 |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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