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
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ramsay and Woolworths is 0.04. 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 Care is expected to under-perform the Woolworths. In addition to that, Ramsay Health is 1.86 times more volatile than Woolworths. It trades about -0.09 of its total potential returns per unit of risk. Woolworths is currently generating about -0.05 per unit of volatility. If you would invest 3,070 in Woolworths on November 4, 2024 and sell it today you would lose (24.00) from holding Woolworths or give up 0.78% of portfolio value 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. Meeka Metals Limited | Ramsay Health vs. Centrex Metals | Ramsay Health vs. Torque Metals | Ramsay Health vs. Cosmo Metals |
| Woolworths vs. Insignia Financial | Woolworths vs. Macquarie Bank Limited | Woolworths vs. COG Financial Services | Woolworths vs. Qbe Insurance Group |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |