Correlation Between Tesco PLC and Woolworths Group
Can any of the company-specific risk be diversified away by investing in both Tesco PLC 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 Tesco PLC and Woolworths Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesco PLC and Woolworths Group Limited, you can compare the effects of market volatilities on Tesco PLC 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 Tesco PLC with a short position of Woolworths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesco PLC and Woolworths Group.
Diversification Opportunities for Tesco PLC and Woolworths Group
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tesco and Woolworths is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Tesco PLC and Woolworths Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths Group 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 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 Tesco PLC i.e., Tesco PLC and Woolworths Group go up and down completely randomly.
Pair Corralation between Tesco PLC and Woolworths Group
Assuming the 90 days horizon Tesco PLC is expected to under-perform the Woolworths Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, Tesco PLC is 1.67 times less risky than Woolworths Group. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Woolworths Group Limited is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,730 in Woolworths Group Limited on November 3, 2024 and sell it today you would earn a total of 291.00 from holding Woolworths Group Limited or generate 16.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesco PLC vs. Woolworths Group Limited
Performance |
| Timeline |
| Tesco PLC |
| Woolworths Group |
Tesco PLC and Woolworths Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesco PLC and Woolworths Group
The main advantage of trading using opposite Tesco PLC and Woolworths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesco PLC 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.| Tesco PLC vs. Ocado Group PLC | Tesco PLC vs. Carrefour SA PK | Tesco PLC vs. J Sainsbury PLC | Tesco PLC vs. Tesco PLC |
| Woolworths Group vs. Tesco PLC | Woolworths Group vs. Tesco PLC | Woolworths Group vs. Ocado Group PLC | Woolworths Group vs. Dairy Farm International |
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.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |