Correlation Between Carrefour and Woolworths Group
Can any of the company-specific risk be diversified away by investing in both Carrefour 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 Carrefour and Woolworths Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carrefour SA PK and Woolworths Group Limited, you can compare the effects of market volatilities on Carrefour 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 Carrefour with a short position of Woolworths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrefour and Woolworths Group.
Diversification Opportunities for Carrefour and Woolworths Group
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Carrefour and Woolworths is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Carrefour SA PK and Woolworths Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths Group and Carrefour 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 Carrefour SA PK 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 Carrefour i.e., Carrefour and Woolworths Group go up and down completely randomly.
Pair Corralation between Carrefour and Woolworths Group
Assuming the 90 days horizon Carrefour SA PK is expected to generate 0.71 times more return on investment than Woolworths Group. However, Carrefour SA PK is 1.42 times less risky than Woolworths Group. It trades about -0.05 of its potential returns per unit of risk. Woolworths Group Limited is currently generating about -0.22 per unit of risk. If you would invest 313.00 in Carrefour SA PK on August 28, 2024 and sell it today you would lose (9.00) from holding Carrefour SA PK or give up 2.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carrefour SA PK vs. Woolworths Group Limited
Performance |
| Timeline |
| Carrefour SA PK |
| Woolworths Group |
Carrefour and Woolworths Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carrefour and Woolworths Group
The main advantage of trading using opposite Carrefour and Woolworths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrefour 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.| Carrefour vs. Natural Grocers by | Carrefour vs. Grocery Outlet Holding | Carrefour vs. Village Super Market | Carrefour vs. Ingles Markets Incorporated |
| Woolworths Group vs. Natural Grocers by | Woolworths Group vs. Grocery Outlet Holding | Woolworths Group vs. Village Super Market | Woolworths Group vs. Ingles Markets Incorporated |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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