Correlation Between Woolworths Holdings and Schroder European
Can any of the company-specific risk be diversified away by investing in both Woolworths Holdings and Schroder European 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 Schroder European into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woolworths Holdings and Schroder European Real, you can compare the effects of market volatilities on Woolworths Holdings and Schroder European 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 Schroder European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woolworths Holdings and Schroder European.
Diversification Opportunities for Woolworths Holdings and Schroder European
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Woolworths and Schroder is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Woolworths Holdings and Schroder European Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schroder European Real 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 Schroder European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schroder European Real has no effect on the direction of Woolworths Holdings i.e., Woolworths Holdings and Schroder European go up and down completely randomly.
Pair Corralation between Woolworths Holdings and Schroder European
Assuming the 90 days trading horizon Woolworths Holdings is expected to generate 1.34 times more return on investment than Schroder European. However, Woolworths Holdings is 1.34 times more volatile than Schroder European Real. It trades about 0.01 of its potential returns per unit of risk. Schroder European Real is currently generating about -0.05 per unit of risk. If you would invest 621,567 in Woolworths Holdings on September 23, 2024 and sell it today you would earn a total of 4,833 from holding Woolworths Holdings or generate 0.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Woolworths Holdings vs. Schroder European Real
Performance |
Timeline |
Woolworths Holdings |
Schroder European Real |
Woolworths Holdings and Schroder European Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Woolworths Holdings and Schroder European
The main advantage of trading using opposite Woolworths Holdings and Schroder European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woolworths Holdings position performs unexpectedly, Schroder European 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 Schroder European will offset losses from the drop in Schroder European's long position.Woolworths Holdings vs. Pick N Pay | Woolworths Holdings vs. Sasol Ltd Bee | Woolworths Holdings vs. Growthpoint Properties | Woolworths Holdings vs. AfricaRhodium ETF |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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