Correlation Between Retail Food and Seven West
Can any of the company-specific risk be diversified away by investing in both Retail Food and Seven West 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 Retail Food and Seven West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Food Group and Seven West Media, you can compare the effects of market volatilities on Retail Food and Seven West 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 Retail Food with a short position of Seven West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Food and Seven West.
Diversification Opportunities for Retail Food and Seven West
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Retail and Seven is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group and Seven West Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven West Media and Retail Food 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 Retail Food Group are associated (or correlated) with Seven West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven West Media has no effect on the direction of Retail Food i.e., Retail Food and Seven West go up and down completely randomly.
Pair Corralation between Retail Food and Seven West
Assuming the 90 days trading horizon Retail Food Group is expected to generate 0.82 times more return on investment than Seven West. However, Retail Food Group is 1.23 times less risky than Seven West. It trades about 0.03 of its potential returns per unit of risk. Seven West Media is currently generating about -0.07 per unit of risk. If you would invest 260.00 in Retail Food Group on September 14, 2024 and sell it today you would earn a total of 28.00 from holding Retail Food Group or generate 10.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Food Group vs. Seven West Media
Performance |
| Timeline |
| Retail Food Group |
| Seven West Media |
Retail Food and Seven West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Food and Seven West
The main advantage of trading using opposite Retail Food and Seven West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Food position performs unexpectedly, Seven West 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 West will offset losses from the drop in Seven West's long position.| Retail Food vs. Farm Pride Foods | Retail Food vs. A1 Investments Resources | Retail Food vs. Sky Metals | Retail Food vs. Regal Investment |
| Seven West vs. Audio Pixels Holdings | Seven West vs. Norwest Minerals | Seven West vs. Lindian Resources | Seven West vs. Chilwa Minerals Limited |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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