Correlation Between Tesco PLC and Healthier Choices
Can any of the company-specific risk be diversified away by investing in both Tesco PLC and Healthier Choices 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 Tesco PLC and Healthier Choices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesco PLC and Healthier Choices Management, you can compare the effects of market volatilities on Tesco PLC and Healthier Choices 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 Tesco PLC with a short position of Healthier Choices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesco PLC and Healthier Choices.
Diversification Opportunities for Tesco PLC and Healthier Choices
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tesco and Healthier is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Tesco PLC and Healthier Choices Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthier Choices and Tesco PLC 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 Tesco PLC are associated (or correlated) with Healthier Choices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthier Choices has no effect on the direction of Tesco PLC i.e., Tesco PLC and Healthier Choices go up and down completely randomly.
Pair Corralation between Tesco PLC and Healthier Choices
Assuming the 90 days horizon Tesco PLC is expected to generate 1131.73 times less return on investment than Healthier Choices. But when comparing it to its historical volatility, Tesco PLC is 160.56 times less risky than Healthier Choices. It trades about 0.06 of its potential returns per unit of risk. Healthier Choices Management is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Healthier Choices Management on September 4, 2024 and sell it today you would earn a total of 0.01 from holding Healthier Choices Management or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 87.9% |
| Values | Daily Returns |
Tesco PLC vs. Healthier Choices Management
Performance |
| Timeline |
| Tesco PLC |
| Healthier Choices |
Tesco PLC and Healthier Choices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesco PLC and Healthier Choices
The main advantage of trading using opposite Tesco PLC and Healthier Choices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesco PLC position performs unexpectedly, Healthier Choices 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 Healthier Choices will offset losses from the drop in Healthier Choices' long position.| Tesco PLC vs. Ocado Group PLC | Tesco PLC vs. Carrefour SA PK | Tesco PLC vs. J Sainsbury PLC | Tesco PLC vs. Tesco PLC |
| Healthier Choices vs. Albertsons Companies | Healthier Choices vs. Sprouts Farmers Market | Healthier Choices vs. Krispy Kreme | Healthier Choices vs. Grocery Outlet Holding |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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