Correlation Between BB Seguridade and Localiza Rent

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

By analyzing existing cross correlation between BB Seguridade Participacoes and Localiza Rent a, you can compare the effects of market volatilities on BB Seguridade 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 BB Seguridade with a short position of Localiza Rent. Check out your portfolio center. Please also check ongoing floating volatility patterns of BB Seguridade and Localiza Rent.

Diversification Opportunities for BB Seguridade and Localiza Rent

0.51

Correlation Coefficient

BB Seguridade  Localiza Rent

Very weak diversification

The 3 months correlation between BBSEY and Localiza is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding BB Seguridade Participacoes 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 BB Seguridade 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 BB Seguridade Participacoes 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 BB Seguridade i.e., BB Seguridade and Localiza Rent go up and down completely randomly.

Pair Corralation between BB Seguridade and Localiza Rent

Assuming the 90 days horizon BB Seguridade Participacoes is expected to under-perform the Localiza Rent. But the pink sheet apears to be less risky and, when comparing its historical volatility, BB Seguridade Participacoes is 1.21 times less risky than Localiza Rent. The pink sheet trades about -0.17 of its potential returns per unit of risk. The Localiza Rent a is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  4,252  in Localiza Rent a on May 5, 2025 and sell it today you would lose (815.00) from holding Localiza Rent a or give up 19.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

BB Seguridade Participacoes  vs.  Localiza Rent a

BB Seguridade Partic

Risk-Adjusted Performance

Very Weak

Over the last 90 days BB Seguridade Participacoes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BB Seguridade and Localiza Rent

The main advantage of trading using opposite BB Seguridade and Localiza Rent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BB Seguridade 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 BB Seguridade Participacoes 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.