Correlation Between Magazine Luiza and Tractor Supply

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

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

Diversification Opportunities for Magazine Luiza and Tractor Supply

0.1

Correlation Coefficient

Magazine Luiza  Tractor Supply

Average diversification

The 3 months correlation between Magazine and Tractor is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Magazine Luiza SA and Tractor Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tractor Supply and Magazine Luiza 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 Magazine Luiza SA are associated (or correlated) with Tractor Supply. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tractor Supply has no effect on the direction of Magazine Luiza i.e., Magazine Luiza and Tractor Supply go up and down completely randomly.

Pair Corralation between Magazine Luiza and Tractor Supply

Assuming the 90 days trading horizon Magazine Luiza SA is expected to under-perform the Tractor Supply. In addition to that, Magazine Luiza is 2.75 times more volatile than Tractor Supply. It trades about -0.29 of its total potential returns per unit of risk. Tractor Supply is currently generating about 0.29 per unit of volatility. If you would invest  1,508  in Tractor Supply on April 15, 2025 and sell it today you would earn a total of  92.00  from holding Tractor Supply or generate 6.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Magazine Luiza SA  vs.  Tractor Supply

Magazine Luiza SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Magazine Luiza SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Tractor Supply

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Magazine Luiza and Tractor Supply

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

The idea behind Magazine Luiza SA and Tractor Supply 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.