Correlation Between Ramsay Health and Woolworths
Can any of the company-specific risk be diversified away by investing in both Ramsay Health and Woolworths 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 Ramsay Health and Woolworths into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ramsay Health Care and Woolworths, you can compare the effects of market volatilities on Ramsay Health and Woolworths 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 Ramsay Health with a short position of Woolworths. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramsay Health and Woolworths.
Diversification Opportunities for Ramsay Health and Woolworths
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ramsay and Woolworths is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ramsay Health Care and Woolworths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths and Ramsay Health 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 Ramsay Health Care are associated (or correlated) with Woolworths. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths has no effect on the direction of Ramsay Health i.e., Ramsay Health and Woolworths go up and down completely randomly.
Pair Corralation between Ramsay Health and Woolworths
Assuming the 90 days trading horizon Ramsay Health is expected to generate 1.14 times less return on investment than Woolworths. In addition to that, Ramsay Health is 1.42 times more volatile than Woolworths. It trades about 0.14 of its total potential returns per unit of risk. Woolworths is currently generating about 0.22 per unit of volatility. If you would invest 3,014 in Woolworths on November 27, 2024 and sell it today you would earn a total of 111.00 from holding Woolworths or generate 3.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ramsay Health Care vs. Woolworths
Performance |
| Timeline |
| Ramsay Health Care |
| Woolworths |
Ramsay Health and Woolworths Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ramsay Health and Woolworths
The main advantage of trading using opposite Ramsay Health and Woolworths positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramsay Health position performs unexpectedly, Woolworths 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 will offset losses from the drop in Woolworths' long position.| Ramsay Health vs. Peel Mining | Ramsay Health vs. Resolute Mining | Ramsay Health vs. G8 Education | Ramsay Health vs. Ora Banda Mining |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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