Correlation Between BSP Financial and Woolworths
Can any of the company-specific risk be diversified away by investing in both BSP Financial and Woolworths 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 BSP Financial and Woolworths into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BSP Financial Group and Woolworths, you can compare the effects of market volatilities on BSP Financial and Woolworths 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 BSP Financial with a short position of Woolworths. Check out your portfolio center. Please also check ongoing floating volatility patterns of BSP Financial and Woolworths.
Diversification Opportunities for BSP Financial and Woolworths
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between BSP and Woolworths is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding BSP Financial Group and Woolworths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths and BSP Financial 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 BSP Financial Group are associated (or correlated) with Woolworths. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths has no effect on the direction of BSP Financial i.e., BSP Financial and Woolworths go up and down completely randomly.
Pair Corralation between BSP Financial and Woolworths
Assuming the 90 days trading horizon BSP Financial Group is expected to generate 1.79 times more return on investment than Woolworths. However, BSP Financial is 1.79 times more volatile than Woolworths. It trades about 0.07 of its potential returns per unit of risk. Woolworths is currently generating about -0.04 per unit of risk. If you would invest 440.00 in BSP Financial Group on September 4, 2024 and sell it today you would earn a total of 214.00 from holding BSP Financial Group or generate 48.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BSP Financial Group vs. Woolworths
Performance |
| Timeline |
| BSP Financial Group |
| Woolworths |
BSP Financial and Woolworths Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BSP Financial and Woolworths
The main advantage of trading using opposite BSP Financial and Woolworths positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BSP Financial position performs unexpectedly, Woolworths 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 will offset losses from the drop in Woolworths' long position.| BSP Financial vs. Aneka Tambang Tbk | BSP Financial vs. Unibail Rodamco Westfield SE | BSP Financial vs. Macquarie Group | BSP Financial vs. Commonwealth Bank |
| Woolworths vs. Dicker Data | Woolworths vs. ABACUS STORAGE KING | Woolworths vs. Australian Unity Office | Woolworths vs. Homeco Daily Needs |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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