Correlation Between FrontView REIT, and Woolworths Group

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

By analyzing existing cross correlation between FrontView REIT, and Woolworths Group Limited, you can compare the effects of market volatilities on FrontView REIT, and Woolworths Group 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 FrontView REIT, with a short position of Woolworths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of FrontView REIT, and Woolworths Group.

Diversification Opportunities for FrontView REIT, and Woolworths Group

0.66

Correlation Coefficient

FrontView REIT,  Woolworths Group

Poor diversification

The 3 months correlation between FrontView and Woolworths is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding FrontView REIT, and Woolworths Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths Group and FrontView REIT, 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 FrontView REIT, are associated (or correlated) with Woolworths Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths Group has no effect on the direction of FrontView REIT, i.e., FrontView REIT, and Woolworths Group go up and down completely randomly.

Pair Corralation between FrontView REIT, and Woolworths Group

Considering the 90-day investment horizon FrontView REIT, is expected to under-perform the Woolworths Group. In addition to that, FrontView REIT, is 1.59 times more volatile than Woolworths Group Limited. It trades about -0.2 of its total potential returns per unit of risk. Woolworths Group Limited is currently generating about -0.07 per unit of volatility. If you would invest  1,797  in Woolworths Group Limited on December 28, 2024 and sell it today you would lose (117.00) from holding Woolworths Group Limited or give up 6.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.77%
Values	Daily Returns

FrontView REIT,  vs.  Woolworths Group Limited

FrontView REIT,

Risk-Adjusted Performance

Very Weak

Over the last 90 days FrontView REIT, has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Woolworths Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Woolworths Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Woolworths Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FrontView REIT, and Woolworths Group

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

The idea behind FrontView REIT, and Woolworths Group Limited 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.