Correlation Between Lowes Companies and METISA Metalrgica

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

By analyzing existing cross correlation between Lowes Companies and METISA Metalrgica Timboense, you can compare the effects of market volatilities on Lowes Companies and METISA Metalrgica 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 Lowes Companies with a short position of METISA Metalrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lowes Companies and METISA Metalrgica.

Diversification Opportunities for Lowes Companies and METISA Metalrgica

-0.28

Correlation Coefficient

Lowes Companies  METISA Metalrgica

Very good diversification

The 3 months correlation between Lowes and METISA is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lowes Companies and METISA Metalrgica Timboense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METISA Metalrgica and Lowes Companies 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 Lowes Companies are associated (or correlated) with METISA Metalrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METISA Metalrgica has no effect on the direction of Lowes Companies i.e., Lowes Companies and METISA Metalrgica go up and down completely randomly.

Pair Corralation between Lowes Companies and METISA Metalrgica

Assuming the 90 days trading horizon Lowes Companies is expected to generate 0.77 times more return on investment than METISA Metalrgica. However, Lowes Companies is 1.3 times less risky than METISA Metalrgica. It trades about 0.06 of its potential returns per unit of risk. METISA Metalrgica Timboense is currently generating about 0.0 per unit of risk. If you would invest  5,503  in Lowes Companies on October 4, 2024 and sell it today you would earn a total of  2,172  from holding Lowes Companies or generate 39.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lowes Companies  vs.  METISA Metalrgica Timboense

Lowes Companies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lowes Companies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Lowes Companies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

METISA Metalrgica

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in METISA Metalrgica Timboense are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, METISA Metalrgica may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Lowes Companies and METISA Metalrgica

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

The idea behind Lowes Companies and METISA Metalrgica Timboense 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.