Correlation Between Lojas Renner and Sears Canada

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

Diversification Opportunities for Lojas Renner and Sears Canada

0.0

Correlation Coefficient

Lojas Renner  Sears Canada

Pay attention - limited upside

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

Pair Corralation between Lojas Renner and Sears Canada

If you would invest (100.00) in Sears Canada on November 29, 2024 and sell it today you would earn a total of  100.00  from holding Sears Canada or generate -100.0% return on investment over 90 days.

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

Lojas Renner SA  vs.  Sears Canada

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.

Sears Canada

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sears Canada has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Sears Canada is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Lojas Renner and Sears Canada

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

The idea behind Lojas Renner SA and Sears Canada 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.