Correlation Between Dairy Farm and Ocado Group
Can any of the company-specific risk be diversified away by investing in both Dairy Farm and Ocado 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 Dairy Farm and Ocado Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dairy Farm International and Ocado Group PLC, you can compare the effects of market volatilities on Dairy Farm and Ocado 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 Dairy Farm with a short position of Ocado Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and Ocado Group.
Diversification Opportunities for Dairy Farm and Ocado Group
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dairy and Ocado is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and Ocado Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocado Group PLC and Dairy Farm 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 Dairy Farm International are associated (or correlated) with Ocado Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocado Group PLC has no effect on the direction of Dairy Farm i.e., Dairy Farm and Ocado Group go up and down completely randomly.
Pair Corralation between Dairy Farm and Ocado Group
Assuming the 90 days horizon Dairy Farm International is expected to under-perform the Ocado Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, Dairy Farm International is 1.73 times less risky than Ocado Group. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Ocado Group PLC is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 743.00 in Ocado Group PLC on August 28, 2024 and sell it today you would lose (371.00) from holding Ocado Group PLC or give up 49.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 55.65% |
| Values | Daily Returns |
Dairy Farm International vs. Ocado Group PLC
Performance |
| Timeline |
| Dairy Farm International |
| Ocado Group PLC |
Dairy Farm and Ocado Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and Ocado Group
The main advantage of trading using opposite Dairy Farm and Ocado Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm position performs unexpectedly, Ocado 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 Ocado Group will offset losses from the drop in Ocado Group's long position.| Dairy Farm vs. Natural Grocers by | Dairy Farm vs. Grocery Outlet Holding | Dairy Farm vs. Village Super Market | Dairy Farm vs. Ingles Markets Incorporated |
| Ocado Group vs. Tesco PLC | Ocado Group vs. Dairy Farm International | Ocado Group vs. Woolworths Group Limited | Ocado Group vs. Kesko Oyj ADR |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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