Correlation Between Gol Linhas and Magazine Luiza
Can any of the company-specific risk be diversified away by investing in both Gol Linhas 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 Gol Linhas and Magazine Luiza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gol Linhas Areas and Magazine Luiza SA, you can compare the effects of market volatilities on Gol Linhas 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 Gol Linhas with a short position of Magazine Luiza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gol Linhas and Magazine Luiza.
Diversification Opportunities for Gol Linhas and Magazine Luiza
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gol and Magazine is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Gol Linhas Areas 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 Gol Linhas 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 Gol Linhas Areas 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 Gol Linhas i.e., Gol Linhas and Magazine Luiza go up and down completely randomly.
Pair Corralation between Gol Linhas and Magazine Luiza
Assuming the 90 days trading horizon Gol Linhas Areas is expected to generate 1.12 times more return on investment than Magazine Luiza. However, Gol Linhas is 1.12 times more volatile than Magazine Luiza SA. It trades about 0.13 of its potential returns per unit of risk. Magazine Luiza SA is currently generating about -0.1 per unit of risk. If you would invest 105.00 in Gol Linhas Areas on September 6, 2024 and sell it today you would earn a total of 33.00 from holding Gol Linhas Areas or generate 31.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Gol Linhas Areas vs. Magazine Luiza SA
Performance |
Timeline |
Gol Linhas Areas |
Magazine Luiza SA |
Gol Linhas and Magazine Luiza Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gol Linhas and Magazine Luiza
The main advantage of trading using opposite Gol Linhas and Magazine Luiza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gol Linhas 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.Gol Linhas vs. METISA Metalrgica Timboense | Gol Linhas vs. Randon SA Implementos | Gol Linhas vs. Fundo Investimento Imobiliario | Gol Linhas vs. Fras le 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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