Correlation Between J Sainsbury and Carrefour
Can any of the company-specific risk be diversified away by investing in both J Sainsbury and Carrefour 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 J Sainsbury and Carrefour into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between J Sainsbury plc and Carrefour SA, you can compare the effects of market volatilities on J Sainsbury and Carrefour 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 J Sainsbury with a short position of Carrefour. Check out your portfolio center. Please also check ongoing floating volatility patterns of J Sainsbury and Carrefour.
Diversification Opportunities for J Sainsbury and Carrefour
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JSNSF and Carrefour is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding J Sainsbury plc and Carrefour SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrefour SA and J Sainsbury 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 J Sainsbury plc are associated (or correlated) with Carrefour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrefour SA has no effect on the direction of J Sainsbury i.e., J Sainsbury and Carrefour go up and down completely randomly.
Pair Corralation between J Sainsbury and Carrefour
Assuming the 90 days horizon J Sainsbury is expected to generate 1.05 times less return on investment than Carrefour. In addition to that, J Sainsbury is 5.98 times more volatile than Carrefour SA. It trades about 0.03 of its total potential returns per unit of risk. Carrefour SA is currently generating about 0.16 per unit of volatility. If you would invest 1,535 in Carrefour SA on September 1, 2024 and sell it today you would earn a total of 38.00 from holding Carrefour SA or generate 2.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
J Sainsbury plc vs. Carrefour SA
Performance |
| Timeline |
| J Sainsbury plc |
| Carrefour SA |
J Sainsbury and Carrefour Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J Sainsbury and Carrefour
The main advantage of trading using opposite J Sainsbury and Carrefour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J Sainsbury position performs unexpectedly, Carrefour 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 Carrefour will offset losses from the drop in Carrefour's long position.| J Sainsbury vs. Kesko Oyj ADR | J Sainsbury vs. Om Holdings International | J Sainsbury vs. Carrefour SA PK | J Sainsbury vs. Carrefour SA |
| Carrefour vs. J Sainsbury plc | Carrefour vs. Om Holdings International | Carrefour vs. Carrefour SA PK | Carrefour 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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