Correlation Between Lojas Renner and Dillards Capital

Can any of the company-specific risk be diversified away by investing in both Lojas Renner and Dillards Capital 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 Capital 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 Capital Trust, you can compare the effects of market volatilities on Lojas Renner and Dillards Capital 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 Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lojas Renner and Dillards Capital.

Diversification Opportunities for Lojas Renner and Dillards Capital

0.8

Correlation Coefficient

Lojas Renner  Dillards Capital

Very poor diversification

The 3 months correlation between Lojas and Dillards is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lojas Renner SA and Dillards Capital Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards Capital Trust 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 Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dillards Capital Trust has no effect on the direction of Lojas Renner i.e., Lojas Renner and Dillards Capital go up and down completely randomly.

Pair Corralation between Lojas Renner and Dillards Capital

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

Lojas Renner SA  vs.  Dillards Capital Trust

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.

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.

Pair Trading with Lojas Renner and Dillards Capital

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

The idea behind Lojas Renner SA and Dillards Capital Trust 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..