Correlation Between Cruzeiro and Lowes Companies

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

By analyzing existing cross correlation between Cruzeiro do Sul and Lowes Companies, you can compare the effects of market volatilities on Cruzeiro and Lowes Companies 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 Cruzeiro with a short position of Lowes Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cruzeiro and Lowes Companies.

Diversification Opportunities for Cruzeiro and Lowes Companies

-0.38

Correlation Coefficient

Cruzeiro  Lowes Companies

Very good diversification

The 3 months correlation between Cruzeiro and Lowes is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cruzeiro do Sul and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies and Cruzeiro 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 Cruzeiro do Sul are associated (or correlated) with Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of Cruzeiro i.e., Cruzeiro and Lowes Companies go up and down completely randomly.

Pair Corralation between Cruzeiro and Lowes Companies

Assuming the 90 days trading horizon Cruzeiro do Sul is expected to generate 1.74 times more return on investment than Lowes Companies. However, Cruzeiro is 1.74 times more volatile than Lowes Companies. It trades about 0.2 of its potential returns per unit of risk. Lowes Companies is currently generating about -0.05 per unit of risk. If you would invest  377.00  in Cruzeiro do Sul on April 25, 2025 and sell it today you would earn a total of  115.00  from holding Cruzeiro do Sul or generate 30.5% return on investment over 90 days.

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

Cruzeiro do Sul  vs.  Lowes Companies

Cruzeiro do Sul

Risk-Adjusted Performance

Good

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

Lowes Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lowes Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Lowes Companies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cruzeiro and Lowes Companies

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

The idea behind Cruzeiro do Sul and Lowes Companies 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.