Correlation Between Tesco PLC and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both Tesco PLC and Dairy Farm 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 Dairy Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesco PLC and Dairy Farm International, you can compare the effects of market volatilities on Tesco PLC and Dairy Farm 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 Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesco PLC and Dairy Farm.
Diversification Opportunities for Tesco PLC and Dairy Farm
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Tesco and Dairy is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Tesco PLC and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International 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 Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of Tesco PLC i.e., Tesco PLC and Dairy Farm go up and down completely randomly.
Pair Corralation between Tesco PLC and Dairy Farm
Assuming the 90 days horizon Tesco PLC is expected to under-perform the Dairy Farm. In addition to that, Tesco PLC is 11.6 times more volatile than Dairy Farm International. It trades about -0.15 of its total potential returns per unit of risk. Dairy Farm International is currently generating about -0.22 per unit of volatility. If you would invest 219.00 in Dairy Farm International on August 28, 2024 and sell it today you would lose (1.00) from holding Dairy Farm International or give up 0.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesco PLC vs. Dairy Farm International
Performance |
| Timeline |
| Tesco PLC |
| Dairy Farm International |
Tesco PLC and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesco PLC and Dairy Farm
The main advantage of trading using opposite Tesco PLC and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesco PLC position performs unexpectedly, Dairy Farm 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 Dairy Farm will offset losses from the drop in Dairy Farm's long position.| Tesco PLC vs. Ocado Group PLC | Tesco PLC vs. Dairy Farm International | Tesco PLC vs. Woolworths Group Limited | Tesco PLC vs. Kesko Oyj ADR |
| Dairy Farm vs. Natural Grocers by | Dairy Farm vs. Grocery Outlet Holding | Dairy Farm vs. Village Super Market | Dairy Farm vs. Ingles Markets Incorporated |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |