Correlation Between Rede DOr and Nordstrom

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

By analyzing existing cross correlation between Rede DOr So and Nordstrom, you can compare the effects of market volatilities on Rede DOr and Nordstrom 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 Rede DOr with a short position of Nordstrom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rede DOr and Nordstrom.

Diversification Opportunities for Rede DOr and Nordstrom

-0.68

Correlation Coefficient

Rede DOr  Nordstrom

Excellent diversification

The 3 months correlation between Rede and Nordstrom is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Rede DOr So and Nordstrom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordstrom and Rede DOr 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 Rede DOr So are associated (or correlated) with Nordstrom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordstrom has no effect on the direction of Rede DOr i.e., Rede DOr and Nordstrom go up and down completely randomly.

Pair Corralation between Rede DOr and Nordstrom

Assuming the 90 days trading horizon Rede DOr is expected to generate 3.11 times less return on investment than Nordstrom. But when comparing it to its historical volatility, Rede DOr So is 1.73 times less risky than Nordstrom. It trades about 0.02 of its potential returns per unit of risk. Nordstrom is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  11,510  in Nordstrom on September 24, 2024 and sell it today you would earn a total of  2,351  from holding Nordstrom or generate 20.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	74.05%
Values	Daily Returns

Rede DOr So  vs.  Nordstrom

Rede DOr So

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nordstrom

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nordstrom are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Nordstrom may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Rede DOr and Nordstrom

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

The idea behind Rede DOr So and Nordstrom 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.