Correlation Between Loblaw Companies and AHOLD DELHAIADR16
Can any of the company-specific risk be diversified away by investing in both Loblaw Companies and AHOLD DELHAIADR16 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 Loblaw Companies and AHOLD DELHAIADR16 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loblaw Companies Limited and AHOLD DELHAIADR16 EO 25, you can compare the effects of market volatilities on Loblaw Companies and AHOLD DELHAIADR16 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 Loblaw Companies with a short position of AHOLD DELHAIADR16. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loblaw Companies and AHOLD DELHAIADR16.
Diversification Opportunities for Loblaw Companies and AHOLD DELHAIADR16
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Loblaw and AHOLD is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Loblaw Companies Limited and AHOLD DELHAIADR16 EO 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AHOLD DELHAIADR16 and Loblaw Companies 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 Loblaw Companies Limited are associated (or correlated) with AHOLD DELHAIADR16. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AHOLD DELHAIADR16 has no effect on the direction of Loblaw Companies i.e., Loblaw Companies and AHOLD DELHAIADR16 go up and down completely randomly.
Pair Corralation between Loblaw Companies and AHOLD DELHAIADR16
Assuming the 90 days horizon Loblaw Companies Limited is expected to generate 1.95 times more return on investment than AHOLD DELHAIADR16. However, Loblaw Companies is 1.95 times more volatile than AHOLD DELHAIADR16 EO 25. It trades about 0.07 of its potential returns per unit of risk. AHOLD DELHAIADR16 EO 25 is currently generating about -0.09 per unit of risk. If you would invest 12,500 in Loblaw Companies Limited on September 13, 2024 and sell it today you would earn a total of 300.00 from holding Loblaw Companies Limited or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loblaw Companies Limited vs. AHOLD DELHAIADR16 EO 25
Performance |
| Timeline |
| Loblaw Companies |
| AHOLD DELHAIADR16 |
Loblaw Companies and AHOLD DELHAIADR16 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loblaw Companies and AHOLD DELHAIADR16
The main advantage of trading using opposite Loblaw Companies and AHOLD DELHAIADR16 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loblaw Companies position performs unexpectedly, AHOLD DELHAIADR16 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 AHOLD DELHAIADR16 will offset losses from the drop in AHOLD DELHAIADR16's long position.| Loblaw Companies vs. KAUFMAN ET BROAD | Loblaw Companies vs. KOOL2PLAY SA ZY | Loblaw Companies vs. Gold Road Resources | Loblaw Companies vs. Universal Display |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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