Correlation Between Lojas Renner and Localiza Rent

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

Diversification Opportunities for Lojas Renner and Localiza Rent

-0.08

Correlation Coefficient

Lojas Renner  Localiza Rent

Good diversification

The 3 months correlation between Lojas and Localiza is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lojas Renner SA and Localiza Rent a in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Localiza Rent a 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 Localiza Rent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Localiza Rent a has no effect on the direction of Lojas Renner i.e., Lojas Renner and Localiza Rent go up and down completely randomly.

Pair Corralation between Lojas Renner and Localiza Rent

Assuming the 90 days trading horizon Lojas Renner SA is expected to generate 0.92 times more return on investment than Localiza Rent. However, Lojas Renner SA is 1.09 times less risky than Localiza Rent. It trades about 0.21 of its potential returns per unit of risk. Localiza Rent a is currently generating about -0.07 per unit of risk. If you would invest  1,351  in Lojas Renner SA on April 24, 2025 and sell it today you would earn a total of  412.00  from holding Lojas Renner SA 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

Lojas Renner SA  vs.  Localiza Rent a

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 16 (%) 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.

Localiza Rent a

Risk-Adjusted Performance

Very Weak

Over the last 90 days Localiza Rent a has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Lojas Renner and Localiza Rent

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

The idea behind Lojas Renner SA and Localiza Rent a 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.