Correlation Between NYSE Composite and Woolworths Group
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Woolworths Group 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 NYSE Composite and Woolworths Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Woolworths Group Limited, you can compare the effects of market volatilities on NYSE Composite and Woolworths Group 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 NYSE Composite with a short position of Woolworths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Woolworths Group.
Diversification Opportunities for NYSE Composite and Woolworths Group
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NYSE and Woolworths is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Woolworths Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths Group and NYSE Composite 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 NYSE Composite are associated (or correlated) with Woolworths Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths Group has no effect on the direction of NYSE Composite i.e., NYSE Composite and Woolworths Group go up and down completely randomly.
Pair Corralation between NYSE Composite and Woolworths Group
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.19 times more return on investment than Woolworths Group. However, NYSE Composite is 5.38 times less risky than Woolworths Group. It trades about 0.04 of its potential returns per unit of risk. Woolworths Group Limited is currently generating about -0.04 per unit of risk. If you would invest 1,956,073 in NYSE Composite on October 24, 2024 and sell it today you would earn a total of 33,286 from holding NYSE Composite or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Woolworths Group Limited
Performance |
| Timeline |
NYSE Composite and Woolworths Group Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Woolworths Group Limited
Pair trading matchups for Woolworths Group
Pair Trading with NYSE Composite and Woolworths Group
The main advantage of trading using opposite NYSE Composite and Woolworths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Woolworths Group 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 Woolworths Group will offset losses from the drop in Woolworths Group's long position.| NYSE Composite vs. Datadog | NYSE Composite vs. Nasdaq Inc | NYSE Composite vs. Air Lease | NYSE Composite vs. EvoAir Holdings |
| Woolworths Group vs. Tesco PLC | Woolworths Group vs. Tesco PLC | Woolworths Group vs. Ocado Group PLC | Woolworths Group vs. Dairy Farm International |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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