Correlation Between Companhia Brasileira and Macys

Can any of the company-specific risk be diversified away by investing in both Companhia Brasileira and Macys 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 Macys 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 Macys Inc, you can compare the effects of market volatilities on Companhia Brasileira and Macys 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 Macys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Brasileira and Macys.

Diversification Opportunities for Companhia Brasileira and Macys

0.0

Correlation Coefficient

Companhia Brasileira  Macys

Pay attention - limited upside

The 3 months correlation between Companhia and Macys is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Brasileira De and Macys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macys Inc 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 Macys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macys Inc has no effect on the direction of Companhia Brasileira i.e., Companhia Brasileira and Macys go up and down completely randomly.

Pair Corralation between Companhia Brasileira and Macys

If you would invest (100.00) in Companhia Brasileira De on November 28, 2024 and sell it today you would earn a total of  100.00  from holding Companhia Brasileira De or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Companhia Brasileira De  vs.  Macys Inc

Companhia Brasileira

Risk-Adjusted Performance

Very Weak

Over the last 90 days Companhia Brasileira De has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Companhia Brasileira is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Macys Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Macys Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Companhia Brasileira and Macys

The main advantage of trading using opposite Companhia Brasileira and Macys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Companhia Brasileira position performs unexpectedly, Macys 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 Macys will offset losses from the drop in Macys' long position.

The idea behind Companhia Brasileira De and Macys Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.