Correlation Between Loblaw Companies and Seven I
Can any of the company-specific risk be diversified away by investing in both Loblaw Companies and Seven I 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 Seven I 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 Seven i Holdings, you can compare the effects of market volatilities on Loblaw Companies and Seven I 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 Seven I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loblaw Companies and Seven I.
Diversification Opportunities for Loblaw Companies and Seven I
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Loblaw and Seven is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Loblaw Companies Limited and Seven i Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven i Holdings 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 Seven I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven i Holdings has no effect on the direction of Loblaw Companies i.e., Loblaw Companies and Seven I go up and down completely randomly.
Pair Corralation between Loblaw Companies and Seven I
Assuming the 90 days horizon Loblaw Companies Limited is expected to under-perform the Seven I. But the stock apears to be less risky and, when comparing its historical volatility, Loblaw Companies Limited is 2.14 times less risky than Seven I. The stock trades about -0.21 of its potential returns per unit of risk. The Seven i Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,480 in Seven i Holdings on October 21, 2024 and sell it today you would earn a total of 45.00 from holding Seven i Holdings or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loblaw Companies Limited vs. Seven i Holdings
Performance |
| Timeline |
| Loblaw Companies |
| Seven i Holdings |
Loblaw Companies and Seven I Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loblaw Companies and Seven I
The main advantage of trading using opposite Loblaw Companies and Seven I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loblaw Companies position performs unexpectedly, Seven I 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 Seven I will offset losses from the drop in Seven I's long position.| Loblaw Companies vs. Seven i Holdings | Loblaw Companies vs. Koninklijke Ahold Delhaize | Loblaw Companies vs. Koninklijke Ahold Delhaize | Loblaw Companies vs. Woolworths Group Limited |
| Seven I vs. Koninklijke Ahold Delhaize | Seven I vs. Koninklijke Ahold Delhaize | Seven I vs. Woolworths Group Limited | Seven I vs. AHOLD DELHAIADR16 EO 25 |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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