Correlation Between Superior Plus and Loblaw Companies
Can any of the company-specific risk be diversified away by investing in both Superior Plus and Loblaw Companies 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 Superior Plus and Loblaw Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Loblaw Companies Limited, you can compare the effects of market volatilities on Superior Plus and Loblaw Companies 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 Superior Plus with a short position of Loblaw Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Loblaw Companies.
Diversification Opportunities for Superior Plus and Loblaw Companies
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Superior and Loblaw is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Loblaw Companies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loblaw Companies and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Loblaw Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loblaw Companies has no effect on the direction of Superior Plus i.e., Superior Plus and Loblaw Companies go up and down completely randomly.
Pair Corralation between Superior Plus and Loblaw Companies
Assuming the 90 days horizon Superior Plus is expected to generate 1.4 times less return on investment than Loblaw Companies. In addition to that, Superior Plus is 1.7 times more volatile than Loblaw Companies Limited. It trades about 0.07 of its total potential returns per unit of risk. Loblaw Companies Limited is currently generating about 0.16 per unit of volatility. If you would invest 12,151 in Loblaw Companies Limited on September 24, 2024 and sell it today you would earn a total of 449.00 from holding Loblaw Companies Limited or generate 3.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Superior Plus Corp vs. Loblaw Companies Limited
Performance |
Timeline |
Superior Plus Corp |
Loblaw Companies |
Superior Plus and Loblaw Companies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Superior Plus and Loblaw Companies
The main advantage of trading using opposite Superior Plus and Loblaw Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, Loblaw Companies 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 Loblaw Companies will offset losses from the drop in Loblaw Companies' long position.Superior Plus vs. Adtalem Global Education | Superior Plus vs. RYU Apparel | Superior Plus vs. VIRGIN WINES UK | Superior Plus vs. Marie Brizard Wine |
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Check out your portfolio center.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 Stocks Directory module to find actively traded stocks across global markets.
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