Correlation Between Loblaw Companies and Weis Markets
Can any of the company-specific risk be diversified away by investing in both Loblaw Companies and Weis Markets 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 Weis Markets 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 Weis Markets, you can compare the effects of market volatilities on Loblaw Companies and Weis Markets 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 Weis Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loblaw Companies and Weis Markets.
Diversification Opportunities for Loblaw Companies and Weis Markets
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Loblaw and Weis is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Loblaw Companies Limited and Weis Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weis Markets 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 Weis Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weis Markets has no effect on the direction of Loblaw Companies i.e., Loblaw Companies and Weis Markets go up and down completely randomly.
Pair Corralation between Loblaw Companies and Weis Markets
Assuming the 90 days horizon Loblaw Companies Limited is expected to generate 0.72 times more return on investment than Weis Markets. However, Loblaw Companies Limited is 1.39 times less risky than Weis Markets. It trades about 0.1 of its potential returns per unit of risk. Weis Markets is currently generating about 0.03 per unit of risk. If you would invest 8,731 in Loblaw Companies Limited on August 31, 2024 and sell it today you would earn a total of 4,138 from holding Loblaw Companies Limited or generate 47.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 86.1% |
| Values | Daily Returns |
Loblaw Companies Limited vs. Weis Markets
Performance |
| Timeline |
| Loblaw Companies |
| Weis Markets |
Loblaw Companies and Weis Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loblaw Companies and Weis Markets
The main advantage of trading using opposite Loblaw Companies and Weis Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loblaw Companies position performs unexpectedly, Weis Markets 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 Weis Markets will offset losses from the drop in Weis Markets' long position.| Loblaw Companies vs. Sprouts Farmers Market | Loblaw Companies vs. Kroger Company | Loblaw Companies vs. Village Super Market | Loblaw Companies vs. Weis Markets |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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