Correlation Between Loblaw Companies and TESCO PLC
Can any of the company-specific risk be diversified away by investing in both Loblaw Companies and TESCO PLC 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 TESCO PLC 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 TESCO PLC ADR1, you can compare the effects of market volatilities on Loblaw Companies and TESCO PLC 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 TESCO PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loblaw Companies and TESCO PLC.
Diversification Opportunities for Loblaw Companies and TESCO PLC
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Loblaw and TESCO is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Loblaw Companies Limited and TESCO PLC ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TESCO PLC ADR1 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 TESCO PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TESCO PLC ADR1 has no effect on the direction of Loblaw Companies i.e., Loblaw Companies and TESCO PLC go up and down completely randomly.
Pair Corralation between Loblaw Companies and TESCO PLC
Assuming the 90 days horizon Loblaw Companies Limited is expected to generate 0.76 times more return on investment than TESCO PLC. However, Loblaw Companies Limited is 1.31 times less risky than TESCO PLC. It trades about 0.13 of its potential returns per unit of risk. TESCO PLC ADR1 is currently generating about 0.09 per unit of risk. If you would invest 7,563 in Loblaw Companies Limited on September 12, 2024 and sell it today you would earn a total of 5,237 from holding Loblaw Companies Limited or generate 69.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loblaw Companies Limited vs. TESCO PLC ADR1
Performance |
| Timeline |
| Loblaw Companies |
| TESCO PLC ADR1 |
Loblaw Companies and TESCO PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loblaw Companies and TESCO PLC
The main advantage of trading using opposite Loblaw Companies and TESCO PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loblaw Companies position performs unexpectedly, TESCO PLC 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 TESCO PLC will offset losses from the drop in TESCO PLC's long position.| Loblaw Companies vs. Woolworths Group Limited | Loblaw Companies vs. Superior Plus Corp | Loblaw Companies vs. SIVERS SEMICONDUCTORS AB | Loblaw Companies vs. Norsk Hydro ASA |
| TESCO PLC vs. Woolworths Group Limited | TESCO PLC vs. Loblaw Companies Limited | TESCO PLC vs. Superior Plus Corp | TESCO PLC vs. SIVERS SEMICONDUCTORS AB |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |