Correlation Between United Parcel and Lojas Renner
Can any of the company-specific risk be diversified away by investing in both United Parcel and Lojas Renner 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 United Parcel and Lojas Renner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Parcel Service and Lojas Renner SA, you can compare the effects of market volatilities on United Parcel and Lojas Renner 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 United Parcel with a short position of Lojas Renner. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parcel and Lojas Renner.
Diversification Opportunities for United Parcel and Lojas Renner
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Lojas is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and Lojas Renner SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lojas Renner SA and United Parcel 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 United Parcel Service are associated (or correlated) with Lojas Renner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lojas Renner SA has no effect on the direction of United Parcel i.e., United Parcel and Lojas Renner go up and down completely randomly.
Pair Corralation between United Parcel and Lojas Renner
Assuming the 90 days trading horizon United Parcel Service is expected to under-perform the Lojas Renner. In addition to that, United Parcel is 1.39 times more volatile than Lojas Renner SA. It trades about -0.14 of its total potential returns per unit of risk. Lojas Renner SA is currently generating about 0.28 per unit of volatility. If you would invest 1,200 in Lojas Renner SA on November 2, 2024 and sell it today you would earn a total of 190.00 from holding Lojas Renner SA or generate 15.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Parcel Service vs. Lojas Renner SA
Performance |
| Timeline |
| United Parcel Service |
| Lojas Renner SA |
United Parcel and Lojas Renner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Parcel and Lojas Renner
The main advantage of trading using opposite United Parcel and Lojas Renner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parcel position performs unexpectedly, Lojas Renner 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 Lojas Renner will offset losses from the drop in Lojas Renner's long position.| United Parcel vs. Monster Beverage | United Parcel vs. Credit Acceptance | United Parcel vs. Ross Stores | United Parcel vs. Discover Financial Services |
| Lojas Renner vs. WEG SA | Lojas Renner vs. Localiza Rent a | Lojas Renner vs. Raia Drogasil SA | Lojas Renner vs. Ambev 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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