Correlation Between J Sainsbury and Ocado Group
Can any of the company-specific risk be diversified away by investing in both J Sainsbury 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 J Sainsbury and Ocado Group 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 Ocado Group PLC, you can compare the effects of market volatilities on J Sainsbury 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 J Sainsbury with a short position of Ocado Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of J Sainsbury and Ocado Group.
Diversification Opportunities for J Sainsbury and Ocado Group
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between JSNSF and Ocado is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding J Sainsbury plc 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 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 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 J Sainsbury i.e., J Sainsbury and Ocado Group go up and down completely randomly.
Pair Corralation between J Sainsbury and Ocado Group
Assuming the 90 days horizon J Sainsbury plc is expected to under-perform the Ocado Group. In addition to that, J Sainsbury is 1.55 times more volatile than Ocado Group PLC. It trades about -0.13 of its total potential returns per unit of risk. Ocado Group PLC is currently generating about -0.02 per unit of volatility. If you would invest 382.00 in Ocado Group PLC on November 3, 2024 and sell it today you would lose (12.00) from holding Ocado Group PLC or give up 3.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
J Sainsbury plc vs. Ocado Group PLC
Performance |
| Timeline |
| J Sainsbury plc |
| Ocado Group PLC |
J Sainsbury and Ocado Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J Sainsbury and Ocado Group
The main advantage of trading using opposite J Sainsbury and Ocado Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J Sainsbury 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.| J Sainsbury vs. Kesko Oyj ADR | J Sainsbury vs. Om Holdings International | J Sainsbury vs. Carrefour SA PK | J Sainsbury vs. Carrefour SA |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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