Correlation Between Dexus Convenience and Woolworths
Can any of the company-specific risk be diversified away by investing in both Dexus Convenience 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 Dexus Convenience and Woolworths into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dexus Convenience Retail and Woolworths, you can compare the effects of market volatilities on Dexus Convenience 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 Dexus Convenience with a short position of Woolworths. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dexus Convenience and Woolworths.
Diversification Opportunities for Dexus Convenience and Woolworths
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dexus and Woolworths is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dexus Convenience Retail and Woolworths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths and Dexus Convenience 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 Dexus Convenience Retail 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 Dexus Convenience i.e., Dexus Convenience and Woolworths go up and down completely randomly.
Pair Corralation between Dexus Convenience and Woolworths
Assuming the 90 days trading horizon Dexus Convenience Retail is expected to under-perform the Woolworths. In addition to that, Dexus Convenience is 2.4 times more volatile than Woolworths. It trades about -0.09 of its total potential returns per unit of risk. Woolworths is currently generating about -0.17 per unit of volatility. If you would invest 3,051 in Woolworths on October 26, 2024 and sell it today you would lose (71.00) from holding Woolworths or give up 2.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Dexus Convenience Retail vs. Woolworths
Performance |
| Timeline |
| Dexus Convenience Retail |
| Woolworths |
Dexus Convenience and Woolworths Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dexus Convenience and Woolworths
The main advantage of trading using opposite Dexus Convenience and Woolworths positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dexus Convenience 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.| Dexus Convenience vs. Flagship Investments | Dexus Convenience vs. Truscott Mining Corp | Dexus Convenience vs. Pinnacle Investment Management | Dexus Convenience vs. A1 Investments Resources |
| Woolworths vs. Ambertech | Woolworths vs. Neurotech International | Woolworths vs. Macquarie Technology Group | Woolworths vs. Dexus Convenience Retail |
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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