Correlation Between Seven I and Tesco PLC
Can any of the company-specific risk be diversified away by investing in both Seven I and Tesco PLC 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 Tesco PLC 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 Tesco PLC, you can compare the effects of market volatilities on Seven I and Tesco PLC 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 Tesco PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven I and Tesco PLC.
Diversification Opportunities for Seven I and Tesco PLC
Very good diversification
The 3 months correlation between Seven and Tesco is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Seven i Holdings and Tesco PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesco 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 Tesco PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesco PLC has no effect on the direction of Seven I i.e., Seven I and Tesco PLC go up and down completely randomly.
Pair Corralation between Seven I and Tesco PLC
Assuming the 90 days horizon Seven i Holdings is expected to generate 1.56 times more return on investment than Tesco PLC. However, Seven I is 1.56 times more volatile than Tesco PLC. It trades about 0.04 of its potential returns per unit of risk. Tesco PLC is currently generating about 0.01 per unit of risk. If you would invest 1,535 in Seven i Holdings on September 3, 2024 and sell it today you would earn a total of 73.00 from holding Seven i Holdings or generate 4.76% 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. Tesco PLC
Performance |
| Timeline |
| Seven i Holdings |
| Tesco PLC |
Seven I and Tesco PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seven I and Tesco PLC
The main advantage of trading using opposite Seven I and Tesco PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven I position performs unexpectedly, Tesco PLC 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 Tesco PLC will offset losses from the drop in Tesco PLC's long position.| Seven I vs. Kesko Oyj ADR | Seven I vs. Om Holdings International | Seven I vs. Tesco PLC | Seven I vs. Carrefour SA |
| Tesco PLC vs. Ocado Group PLC | Tesco PLC vs. Carrefour SA PK | Tesco PLC vs. J Sainsbury PLC | Tesco PLC vs. Tesco PLC |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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