Correlation Between Seven I and Woolworths Group

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

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

Diversification Opportunities for Seven I and Woolworths Group

-0.38

Correlation Coefficient

Seven I  Woolworths Group

Very good diversification

The 3 months correlation between Seven and Woolworths is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Seven i Holdings and Woolworths Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths Group and Seven I 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 Seven i Holdings 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 Seven I i.e., Seven I and Woolworths Group go up and down completely randomly.

Pair Corralation between Seven I and Woolworths Group

Assuming the 90 days horizon Seven i Holdings is expected to generate 1.81 times more return on investment than Woolworths Group. However, Seven I is 1.81 times more volatile than Woolworths Group Limited. It trades about 0.07 of its potential returns per unit of risk. Woolworths Group Limited is currently generating about -0.12 per unit of risk. If you would invest  1,394  in Seven i Holdings on October 13, 2024 and sell it today you would earn a total of  122.00  from holding Seven i Holdings or generate 8.75% return on investment over 90 days.

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

Seven i Holdings  vs.  Woolworths Group Limited

Seven i Holdings

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seven i Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Seven I may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Woolworths Group

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Seven I and Woolworths Group

The main advantage of trading using opposite Seven I and Woolworths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven I 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 Seven i Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.