Correlation Between Loblaw Companies and Carrefour
Can any of the company-specific risk be diversified away by investing in both Loblaw Companies 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 Loblaw Companies and Carrefour 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 Carrefour SA, you can compare the effects of market volatilities on Loblaw Companies 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 Loblaw Companies with a short position of Carrefour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loblaw Companies and Carrefour.
Diversification Opportunities for Loblaw Companies and Carrefour
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Loblaw and Carrefour is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Loblaw Companies Limited and Carrefour SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrefour SA 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 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 Loblaw Companies i.e., Loblaw Companies and Carrefour go up and down completely randomly.
Pair Corralation between Loblaw Companies and Carrefour
Assuming the 90 days horizon Loblaw Companies Limited is expected to generate 0.81 times more return on investment than Carrefour. However, Loblaw Companies Limited is 1.24 times less risky than Carrefour. It trades about 0.13 of its potential returns per unit of risk. Carrefour SA is currently generating about -0.03 per unit of risk. If you would invest 7,949 in Loblaw Companies Limited on September 4, 2024 and sell it today you would earn a total of 4,251 from holding Loblaw Companies Limited or generate 53.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Loblaw Companies Limited vs. Carrefour SA
Performance |
| Timeline |
| Loblaw Companies |
| Carrefour SA |
Loblaw Companies and Carrefour Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loblaw Companies and Carrefour
The main advantage of trading using opposite Loblaw Companies and Carrefour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loblaw Companies 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.| Loblaw Companies vs. NURAN WIRELESS INC | Loblaw Companies vs. VITEC SOFTWARE GROUP | Loblaw Companies vs. Citic Telecom International | Loblaw Companies vs. INTERSHOP Communications Aktiengesellschaft |
| Carrefour vs. Seven i Holdings | Carrefour vs. AHOLD DELHAIADR16 EO 25 | Carrefour vs. Loblaw Companies Limited | Carrefour vs. TESCO PLC LS 0633333 |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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