Correlation Between Homeco Daily and Woolworths
Can any of the company-specific risk be diversified away by investing in both Homeco Daily 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 Homeco Daily and Woolworths into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Homeco Daily Needs and Woolworths, you can compare the effects of market volatilities on Homeco Daily 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 Homeco Daily with a short position of Woolworths. Check out your portfolio center. Please also check ongoing floating volatility patterns of Homeco Daily and Woolworths.
Diversification Opportunities for Homeco Daily and Woolworths
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Homeco and Woolworths is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Homeco Daily Needs and Woolworths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths and Homeco Daily 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 Homeco Daily Needs 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 Homeco Daily i.e., Homeco Daily and Woolworths go up and down completely randomly.
Pair Corralation between Homeco Daily and Woolworths
Assuming the 90 days trading horizon Homeco Daily Needs is expected to generate 1.36 times more return on investment than Woolworths. However, Homeco Daily is 1.36 times more volatile than Woolworths. It trades about 0.03 of its potential returns per unit of risk. Woolworths is currently generating about -0.05 per unit of risk. If you would invest 115.00 in Homeco Daily Needs on September 4, 2024 and sell it today you would earn a total of 9.00 from holding Homeco Daily Needs or generate 7.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Homeco Daily Needs vs. Woolworths
Performance |
| Timeline |
| Homeco Daily Needs |
| Woolworths |
Homeco Daily and Woolworths Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Homeco Daily and Woolworths
The main advantage of trading using opposite Homeco Daily and Woolworths positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Homeco Daily 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.| Homeco Daily vs. Vicinity Centres Re | Homeco Daily vs. Cromwell Property Group | Homeco Daily vs. Carindale Property Trust | Homeco Daily vs. Australian Unity Office |
| 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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