Correlation Between Dillards and Companhia Brasileira

Can any of the company-specific risk be diversified away by investing in both Dillards and Companhia Brasileira 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 Dillards and Companhia Brasileira into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dillards and Companhia Brasileira De, you can compare the effects of market volatilities on Dillards and Companhia Brasileira 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 Dillards with a short position of Companhia Brasileira. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dillards and Companhia Brasileira.

Diversification Opportunities for Dillards and Companhia Brasileira

0.0

Correlation Coefficient

Dillards  Companhia Brasileira

Pay attention - limited upside

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

Pair Corralation between Dillards and Companhia Brasileira

If you would invest  41,845  in Dillards on November 28, 2024 and sell it today you would earn a total of  4,176  from holding Dillards or generate 9.98% return on investment over 90 days.

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

Dillards  vs.  Companhia Brasileira De

Dillards

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dillards are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental indicators, Dillards may actually be approaching a critical reversion point that can send shares even higher in March 2025.

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.

Pair Trading with Dillards and Companhia Brasileira

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

The idea behind Dillards and Companhia Brasileira De 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.