Correlation Between Nordstrom and Woolworths Holdings
Can any of the company-specific risk be diversified away by investing in both Nordstrom and Woolworths Holdings 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 Nordstrom and Woolworths Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordstrom and Woolworths Holdings Ltd, you can compare the effects of market volatilities on Nordstrom and Woolworths Holdings 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 Nordstrom with a short position of Woolworths Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordstrom and Woolworths Holdings.
Diversification Opportunities for Nordstrom and Woolworths Holdings
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nordstrom and Woolworths is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Nordstrom and Woolworths Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths Holdings and Nordstrom 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 Nordstrom are associated (or correlated) with Woolworths Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths Holdings has no effect on the direction of Nordstrom i.e., Nordstrom and Woolworths Holdings go up and down completely randomly.
Pair Corralation between Nordstrom and Woolworths Holdings
Considering the 90-day investment horizon Nordstrom is expected to generate 0.83 times more return on investment than Woolworths Holdings. However, Nordstrom is 1.2 times less risky than Woolworths Holdings. It trades about 0.16 of its potential returns per unit of risk. Woolworths Holdings Ltd is currently generating about 0.01 per unit of risk. If you would invest 2,322 in Nordstrom on August 27, 2024 and sell it today you would earn a total of 168.00 from holding Nordstrom or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordstrom vs. Woolworths Holdings Ltd
Performance |
| Timeline |
| Nordstrom |
| Woolworths Holdings |
Nordstrom and Woolworths Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordstrom and Woolworths Holdings
The main advantage of trading using opposite Nordstrom and Woolworths Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordstrom position performs unexpectedly, Woolworths Holdings 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 Holdings will offset losses from the drop in Woolworths Holdings' long position.| Nordstrom vs. Kohls Corp | Nordstrom vs. Dillards | Nordstrom vs. Marks Spencer Group | Nordstrom vs. Marks and Spencer |
| Woolworths Holdings vs. Kohls Corp | Woolworths Holdings vs. Nordstrom | Woolworths Holdings vs. Macys Inc | Woolworths Holdings vs. Dillards |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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