Correlation Between Lojas Renner and Marks

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

Diversification Opportunities for Lojas Renner and Marks

0.0

Correlation Coefficient

Lojas Renner  Marks

Pay attention - limited upside

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

Pair Corralation between Lojas Renner and Marks

If you would invest (100.00) in Lojas Renner SA on November 28, 2024 and sell it today you would earn a total of  100.00  from holding Lojas Renner SA or generate -100.0% 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.  Marks and Spencer

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.

Marks and Spencer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marks and Spencer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Lojas Renner and Marks

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

The idea behind Lojas Renner SA and Marks and Spencer 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.