Correlation Between Tesco PLC and Ocado Group
Can any of the company-specific risk be diversified away by investing in both Tesco PLC 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 Tesco PLC and Ocado 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 Ocado Group PLC, you can compare the effects of market volatilities on Tesco PLC 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 Tesco PLC with a short position of Ocado Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesco PLC and Ocado Group.
Diversification Opportunities for Tesco PLC and Ocado Group
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tesco and Ocado is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Tesco PLC 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 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 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 Tesco PLC i.e., Tesco PLC and Ocado Group go up and down completely randomly.
Pair Corralation between Tesco PLC and Ocado Group
Assuming the 90 days horizon Tesco PLC is expected to generate 0.26 times more return on investment than Ocado Group. However, Tesco PLC is 3.78 times less risky than Ocado Group. It trades about 0.1 of its potential returns per unit of risk. Ocado Group PLC is currently generating about -0.02 per unit of risk. If you would invest 900.00 in Tesco PLC on August 28, 2024 and sell it today you would earn a total of 428.00 from holding Tesco PLC or generate 47.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Tesco PLC vs. Ocado Group PLC
Performance |
| Timeline |
| Tesco PLC |
| Ocado Group PLC |
Tesco PLC and Ocado Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesco PLC and Ocado Group
The main advantage of trading using opposite Tesco PLC and Ocado Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesco PLC 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.| Tesco PLC vs. Ocado Group PLC | Tesco PLC vs. Dairy Farm International | Tesco PLC vs. Woolworths Group Limited | Tesco PLC vs. Kesko Oyj ADR |
| Ocado Group vs. Tesco PLC | Ocado Group vs. Dairy Farm International | Ocado Group vs. Woolworths Group Limited | Ocado Group vs. Kesko Oyj 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |