Correlation Between Walmart and Lojas Renner
Can any of the company-specific risk be diversified away by investing in both Walmart 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 Walmart and Lojas Renner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Lojas Renner SA, you can compare the effects of market volatilities on Walmart 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 Walmart with a short position of Lojas Renner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Lojas Renner.
Diversification Opportunities for Walmart and Lojas Renner
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Walmart and Lojas is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Walmart 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 Walmart 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 Walmart 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 Walmart i.e., Walmart and Lojas Renner go up and down completely randomly.
Pair Corralation between Walmart and Lojas Renner
Assuming the 90 days trading horizon Walmart is expected to generate 0.53 times more return on investment than Lojas Renner. However, Walmart is 1.87 times less risky than Lojas Renner. It trades about 0.22 of its potential returns per unit of risk. Lojas Renner SA is currently generating about 0.0 per unit of risk. If you would invest 1,636 in Walmart on November 9, 2024 and sell it today you would earn a total of 2,068 from holding Walmart or generate 126.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Lojas Renner SA
Performance |
| Timeline |
| Walmart |
| Lojas Renner SA |
Walmart and Lojas Renner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Lojas Renner
The main advantage of trading using opposite Walmart and Lojas Renner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart 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.| Walmart vs. Applied Materials, | Walmart vs. Annaly Capital Management, | Walmart vs. Martin Marietta Materials, | Walmart vs. Ares Management |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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