Correlation Between Dillards Capital and Lojas Renner

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

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

Diversification Opportunities for Dillards Capital and Lojas Renner

0.8

Correlation Coefficient

Dillards Capital  Lojas Renner

Very poor diversification

The 3 months correlation between Dillards and Lojas is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dillards Capital Trust 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 Dillards Capital 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 Capital Trust 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 Dillards Capital i.e., Dillards Capital and Lojas Renner go up and down completely randomly.

Pair Corralation between Dillards Capital and Lojas Renner

If you would invest  2,519  in Dillards Capital Trust on August 30, 2024 and sell it today you would earn a total of  68.00  from holding Dillards Capital Trust or generate 2.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.56%
Values	Daily Returns

Dillards Capital Trust  vs.  Lojas Renner SA

Dillards Capital Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dillards Capital Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Dillards Capital is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Lojas Renner SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lojas Renner SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Lojas Renner is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dillards Capital and Lojas Renner

The main advantage of trading using opposite Dillards Capital and Lojas Renner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dillards Capital 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.

The idea behind Dillards Capital Trust and Lojas Renner SA 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.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.