Correlation Between Lojas Renner and Dillards

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

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

Diversification Opportunities for Lojas Renner and Dillards

0.0

Correlation Coefficient

Lojas Renner  Dillards

Pay attention - limited upside

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

Pair Corralation between Lojas Renner and Dillards

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

Lojas Renner SA  vs.  Dillards

Lojas Renner SA

Risk-Adjusted Performance

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.

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.

Pair Trading with Lojas Renner and Dillards

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

The idea behind Lojas Renner SA and Dillards 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.