Correlation Between Seven I and Ocado Group
Can any of the company-specific risk be diversified away by investing in both Seven I and Ocado 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 Seven I and Ocado Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seven i Holdings and Ocado Group plc, you can compare the effects of market volatilities on Seven I and Ocado 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 Seven I with a short position of Ocado Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven I and Ocado Group.
Diversification Opportunities for Seven I and Ocado Group
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Seven and Ocado is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Seven i Holdings and Ocado Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocado Group plc and Seven I 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 Seven i Holdings are associated (or correlated) with Ocado Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocado Group plc has no effect on the direction of Seven I i.e., Seven I and Ocado Group go up and down completely randomly.
Pair Corralation between Seven I and Ocado Group
Assuming the 90 days horizon Seven i Holdings is expected to under-perform the Ocado Group. In addition to that, Seven I is 1.23 times more volatile than Ocado Group plc. It trades about -0.04 of its total potential returns per unit of risk. Ocado Group plc is currently generating about 0.19 per unit of volatility. If you would invest 713.00 in Ocado Group plc on November 9, 2024 and sell it today you would earn a total of 102.00 from holding Ocado Group plc or generate 14.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seven i Holdings vs. Ocado Group plc
Performance |
| Timeline |
| Seven i Holdings |
| Ocado Group plc |
Seven I and Ocado Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seven I and Ocado Group
The main advantage of trading using opposite Seven I and Ocado Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven I position performs unexpectedly, Ocado 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 Ocado Group will offset losses from the drop in Ocado Group's long position.The idea behind Seven i Holdings and Ocado Group plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Ocado Group vs. Natural Grocers by | Ocado Group vs. Grocery Outlet Holding | Ocado Group vs. Village Super Market | Ocado Group vs. Ingles Markets Incorporated |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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