Correlation Between Woolworths Holdings and Argent
Can any of the company-specific risk be diversified away by investing in both Woolworths Holdings and Argent 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 Woolworths Holdings and Argent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woolworths Holdings and Argent, you can compare the effects of market volatilities on Woolworths Holdings and Argent 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 Woolworths Holdings with a short position of Argent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woolworths Holdings and Argent.
Diversification Opportunities for Woolworths Holdings and Argent
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Woolworths and Argent is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Woolworths Holdings and Argent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argent and Woolworths Holdings 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 Woolworths Holdings are associated (or correlated) with Argent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argent has no effect on the direction of Woolworths Holdings i.e., Woolworths Holdings and Argent go up and down completely randomly.
Pair Corralation between Woolworths Holdings and Argent
Assuming the 90 days trading horizon Woolworths Holdings is expected to under-perform the Argent. But the stock apears to be less risky and, when comparing its historical volatility, Woolworths Holdings is 1.05 times less risky than Argent. The stock trades about -0.2 of its potential returns per unit of risk. The Argent is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 280,900 in Argent on September 24, 2024 and sell it today you would lose (6,200) from holding Argent or give up 2.21% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Woolworths Holdings vs. Argent
Performance |
Timeline |
Woolworths Holdings |
Argent |
Woolworths Holdings and Argent Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Woolworths Holdings and Argent
The main advantage of trading using opposite Woolworths Holdings and Argent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woolworths Holdings position performs unexpectedly, Argent 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 Argent will offset losses from the drop in Argent's long position.Woolworths Holdings vs. Shoprite Holdings | Woolworths Holdings vs. Pick N Pay | Woolworths Holdings vs. Discovery Holdings | Woolworths Holdings vs. Prosus NV |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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