Correlation Between Sendas Distribuidora and Weis Markets

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

Diversification Opportunities for Sendas Distribuidora and Weis Markets

0.25

Correlation Coefficient

Sendas Distribuidora  Weis Markets

Modest diversification

The 3 months correlation between Sendas and Weis is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sendas Distribuidora SA and Weis Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weis Markets 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 Weis Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weis Markets has no effect on the direction of Sendas Distribuidora i.e., Sendas Distribuidora and Weis Markets go up and down completely randomly.

Pair Corralation between Sendas Distribuidora and Weis Markets

Given the investment horizon of 90 days Sendas Distribuidora SA is expected to generate 1.64 times more return on investment than Weis Markets. However, Sendas Distribuidora is 1.64 times more volatile than Weis Markets. It trades about 0.02 of its potential returns per unit of risk. Weis Markets is currently generating about -0.01 per unit of risk. If you would invest  1,320  in Sendas Distribuidora SA on January 31, 2024 and sell it today you would earn a total of  10.00  from holding Sendas Distribuidora SA or generate 0.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sendas Distribuidora SA  vs.  Weis Markets

Sendas Distribuidora

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sendas Distribuidora SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Sendas Distribuidora is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Weis Markets

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Weis Markets are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent primary indicators, Weis Markets is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Sendas Distribuidora and Weis Markets

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

The idea behind Sendas Distribuidora SA and Weis Markets 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.