Correlation Between Village Super and Ocado Group
Can any of the company-specific risk be diversified away by investing in both Village Super 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 Village Super and Ocado Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Village Super Market and Ocado Group plc, you can compare the effects of market volatilities on Village Super 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 Village Super with a short position of Ocado Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Village Super and Ocado Group.
Diversification Opportunities for Village Super and Ocado Group
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Village and Ocado is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Village Super Market 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 Village Super 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 Village Super Market 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 Village Super i.e., Village Super and Ocado Group go up and down completely randomly.
Pair Corralation between Village Super and Ocado Group
Assuming the 90 days horizon Village Super Market is expected to generate 0.4 times more return on investment than Ocado Group. However, Village Super Market is 2.52 times less risky than Ocado Group. It trades about 0.06 of its potential returns per unit of risk. Ocado Group plc is currently generating about -0.01 per unit of risk. If you would invest 2,114 in Village Super Market on August 23, 2024 and sell it today you would earn a total of 1,078 from holding Village Super Market or generate 50.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Village Super Market vs. Ocado Group plc
Performance |
| Timeline |
| Village Super Market |
| Ocado Group plc |
Village Super and Ocado Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Village Super and Ocado Group
The main advantage of trading using opposite Village Super and Ocado Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Village Super 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.The idea behind Village Super Market and Ocado Group plc 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.| Ocado Group vs. Kroger Company | Ocado Group vs. Seven i Holdings | Ocado Group vs. Woolworths Group Limited | Ocado Group vs. Koninklijke Ahold Delhaize |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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