Correlation Between Sendas Distribuidora and Lojas Renner

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

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

Diversification Opportunities for Sendas Distribuidora and Lojas Renner

0.8

Correlation Coefficient

Sendas Distribuidora  Lojas Renner

Very poor diversification

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

Pair Corralation between Sendas Distribuidora and Lojas Renner

Assuming the 90 days trading horizon Sendas Distribuidora is expected to generate 3.65 times less return on investment than Lojas Renner. In addition to that, Sendas Distribuidora is 1.15 times more volatile than Lojas Renner SA. It trades about 0.05 of its total potential returns per unit of risk. Lojas Renner SA is currently generating about 0.2 per unit of volatility. If you would invest  1,351  in Lojas Renner SA on April 24, 2025 and sell it today you would earn a total of  391.00  from holding Lojas Renner SA or generate 28.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Sendas Distribuidora SA  vs.  Lojas Renner SA

Sendas Distribuidora

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sendas Distribuidora SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Sendas Distribuidora may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Lojas Renner SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lojas Renner SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lojas Renner unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sendas Distribuidora and Lojas Renner

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

The idea behind Sendas Distribuidora SA and Lojas Renner SA 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.