Correlation Between TRADEGATE and Woolworths Group
Can any of the company-specific risk be diversified away by investing in both TRADEGATE and Woolworths 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 TRADEGATE and Woolworths Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRADEGATE and Woolworths Group Limited, you can compare the effects of market volatilities on TRADEGATE and Woolworths 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 TRADEGATE with a short position of Woolworths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRADEGATE and Woolworths Group.
Diversification Opportunities for TRADEGATE and Woolworths Group
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TRADEGATE and Woolworths is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding TRADEGATE and Woolworths Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths Group and TRADEGATE 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 TRADEGATE are associated (or correlated) with Woolworths Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths Group has no effect on the direction of TRADEGATE i.e., TRADEGATE and Woolworths Group go up and down completely randomly.
Pair Corralation between TRADEGATE and Woolworths Group
Assuming the 90 days trading horizon TRADEGATE is expected to under-perform the Woolworths Group. But the stock apears to be less risky and, when comparing its historical volatility, TRADEGATE is 1.14 times less risky than Woolworths Group. The stock trades about -0.06 of its potential returns per unit of risk. The Woolworths Group Limited is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,978 in Woolworths Group Limited on September 14, 2024 and sell it today you would lose (128.00) from holding Woolworths Group Limited or give up 6.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.64% |
| Values | Daily Returns |
TRADEGATE vs. Woolworths Group Limited
Performance |
| Timeline |
| TRADEGATE |
| Woolworths Group |
TRADEGATE and Woolworths Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRADEGATE and Woolworths Group
The main advantage of trading using opposite TRADEGATE and Woolworths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRADEGATE position performs unexpectedly, Woolworths 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 Woolworths Group will offset losses from the drop in Woolworths Group's long position.The idea behind TRADEGATE and Woolworths Group Limited 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.| Woolworths Group vs. TRADEGATE | Woolworths Group vs. United Rentals | Woolworths Group vs. Universal Display | Woolworths Group vs. FAST RETAIL ADR |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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