Correlation Between Loblaw Companies and SEVEN+I HLDGS

Can any of the company-specific risk be diversified away by investing in both Loblaw Companies and SEVEN+I HLDGS 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 Loblaw Companies and SEVEN+I HLDGS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Loblaw Companies Limited and SEVENI HLDGS UNSPADR12, you can compare the effects of market volatilities on Loblaw Companies and SEVEN+I HLDGS 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 Loblaw Companies with a short position of SEVEN+I HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loblaw Companies and SEVEN+I HLDGS.

Diversification Opportunities for Loblaw Companies and SEVEN+I HLDGS

-0.4

Correlation Coefficient

Loblaw Companies  SEVEN+I HLDGS

Very good diversification

The 3 months correlation between Loblaw and SEVEN+I is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Loblaw Companies Limited and SEVENI HLDGS UNSPADR12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEVENI HLDGS UNSPADR12 and Loblaw Companies 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 Loblaw Companies Limited are associated (or correlated) with SEVEN+I HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEVENI HLDGS UNSPADR12 has no effect on the direction of Loblaw Companies i.e., Loblaw Companies and SEVEN+I HLDGS go up and down completely randomly.

Pair Corralation between Loblaw Companies and SEVEN+I HLDGS

Assuming the 90 days horizon Loblaw Companies Limited is expected to generate 0.63 times more return on investment than SEVEN+I HLDGS. However, Loblaw Companies Limited is 1.59 times less risky than SEVEN+I HLDGS. It trades about 0.11 of its potential returns per unit of risk. SEVENI HLDGS UNSPADR12 is currently generating about 0.05 per unit of risk. If you would invest  10,413  in Loblaw Companies Limited on October 13, 2024 and sell it today you would earn a total of  2,087  from holding Loblaw Companies Limited or generate 20.04% return on investment over 90 days.

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

Loblaw Companies Limited  vs.  SEVENI HLDGS UNSPADR12

Loblaw Companies

Risk-Adjusted Performance

7 of 100

OK

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

SEVENI HLDGS UNSPADR12

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SEVENI HLDGS UNSPADR12 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, SEVEN+I HLDGS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Loblaw Companies and SEVEN+I HLDGS

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

The idea behind Loblaw Companies Limited and SEVENI HLDGS UNSPADR12 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.