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
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Seven and Ocado is 0.09. 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 is expected to generate 3.12 times less return on investment than Ocado Group. But when comparing it to its historical volatility, Seven i Holdings is 2.35 times less risky than Ocado Group. It trades about 0.14 of its potential returns per unit of risk. Ocado Group plc is currently generating about 0.19 of returns per unit of risk over similar time horizon. 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 Together |
| 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.| Seven I vs. Koninklijke Ahold Delhaize | Seven I vs. Weis Markets | Seven I vs. Albertsons Companies | Seven I vs. Dingdong ADR |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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