Correlation Between Shoprite Holdings and Marks
Can any of the company-specific risk be diversified away by investing in both Shoprite Holdings and Marks 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 Shoprite Holdings and Marks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shoprite Holdings Limited and Marks and Spencer, you can compare the effects of market volatilities on Shoprite Holdings and Marks 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 Shoprite Holdings with a short position of Marks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shoprite Holdings and Marks.
Diversification Opportunities for Shoprite Holdings and Marks
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shoprite and Marks is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Shoprite Holdings Limited and Marks and Spencer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks and Spencer and Shoprite Holdings 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 Shoprite Holdings Limited are associated (or correlated) with Marks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks and Spencer has no effect on the direction of Shoprite Holdings i.e., Shoprite Holdings and Marks go up and down completely randomly.
Pair Corralation between Shoprite Holdings and Marks
Assuming the 90 days horizon Shoprite Holdings Limited is expected to generate 1.48 times more return on investment than Marks. However, Shoprite Holdings is 1.48 times more volatile than Marks and Spencer. It trades about 0.09 of its potential returns per unit of risk. Marks and Spencer is currently generating about 0.11 per unit of risk. If you would invest 357.00 in Shoprite Holdings Limited on September 13, 2024 and sell it today you would earn a total of 1,233 from holding Shoprite Holdings Limited or generate 345.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shoprite Holdings Limited vs. Marks and Spencer
Performance |
| Timeline |
| Shoprite Holdings |
| Marks and Spencer |
Shoprite Holdings and Marks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shoprite Holdings and Marks
The main advantage of trading using opposite Shoprite Holdings and Marks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shoprite Holdings position performs unexpectedly, Marks 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 Marks will offset losses from the drop in Marks' long position.| Shoprite Holdings vs. Constellation Software | Shoprite Holdings vs. MAGIC SOFTWARE ENTR | Shoprite Holdings vs. Lion Biotechnologies | Shoprite Holdings vs. GLG LIFE TECH |
| Marks vs. STRAYER EDUCATION | Marks vs. Sportsmans Warehouse Holdings | Marks vs. JD SPORTS FASH | Marks vs. VIAPLAY GROUP AB |
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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