Correlation Between CVC Brasil and Magazine Luiza
Can any of the company-specific risk be diversified away by investing in both CVC Brasil and Magazine Luiza 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 CVC Brasil and Magazine Luiza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVC Brasil Operadora and Magazine Luiza SA, you can compare the effects of market volatilities on CVC Brasil and Magazine Luiza 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 CVC Brasil with a short position of Magazine Luiza. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVC Brasil and Magazine Luiza.
Diversification Opportunities for CVC Brasil and Magazine Luiza
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CVC and Magazine is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding CVC Brasil Operadora and Magazine Luiza SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magazine Luiza SA and CVC Brasil 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 CVC Brasil Operadora are associated (or correlated) with Magazine Luiza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magazine Luiza SA has no effect on the direction of CVC Brasil i.e., CVC Brasil and Magazine Luiza go up and down completely randomly.
Pair Corralation between CVC Brasil and Magazine Luiza
Assuming the 90 days trading horizon CVC Brasil is expected to generate 51.8 times less return on investment than Magazine Luiza. But when comparing it to its historical volatility, CVC Brasil Operadora is 8.96 times less risky than Magazine Luiza. It trades about 0.01 of its potential returns per unit of risk. Magazine Luiza SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,370 in Magazine Luiza SA on September 6, 2024 and sell it today you would lose (1,446) from holding Magazine Luiza SA or give up 61.01% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.8% |
Values | Daily Returns |
CVC Brasil Operadora vs. Magazine Luiza SA
Performance |
Timeline |
CVC Brasil Operadora |
Magazine Luiza SA |
CVC Brasil and Magazine Luiza Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CVC Brasil and Magazine Luiza
The main advantage of trading using opposite CVC Brasil and Magazine Luiza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVC Brasil position performs unexpectedly, Magazine Luiza 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 Magazine Luiza will offset losses from the drop in Magazine Luiza's long position.CVC Brasil vs. Azul SA | CVC Brasil vs. IRB Brasil Resseguros SA | CVC Brasil vs. Gol Linhas Areas | CVC Brasil vs. Cogna Educao SA |
Magazine Luiza vs. WEG SA | Magazine Luiza vs. Vale SA | Magazine Luiza vs. Itasa Investimentos | Magazine Luiza vs. Ita Unibanco Holding |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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