Correlation Between Woolworths Holdings and Kohls Corp
Can any of the company-specific risk be diversified away by investing in both Woolworths Holdings and Kohls Corp 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 Woolworths Holdings and Kohls Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woolworths Holdings Ltd and Kohls Corp, you can compare the effects of market volatilities on Woolworths Holdings and Kohls Corp 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 Woolworths Holdings with a short position of Kohls Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woolworths Holdings and Kohls Corp.
Diversification Opportunities for Woolworths Holdings and Kohls Corp
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Woolworths and Kohls is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Woolworths Holdings Ltd and Kohls Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kohls Corp and Woolworths Holdings 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 Woolworths Holdings Ltd are associated (or correlated) with Kohls Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kohls Corp has no effect on the direction of Woolworths Holdings i.e., Woolworths Holdings and Kohls Corp go up and down completely randomly.
Pair Corralation between Woolworths Holdings and Kohls Corp
Assuming the 90 days horizon Woolworths Holdings Ltd is expected to generate 0.88 times more return on investment than Kohls Corp. However, Woolworths Holdings Ltd is 1.13 times less risky than Kohls Corp. It trades about -0.09 of its potential returns per unit of risk. Kohls Corp is currently generating about -0.25 per unit of risk. If you would invest 399.00 in Woolworths Holdings Ltd on August 24, 2024 and sell it today you would lose (21.00) from holding Woolworths Holdings Ltd or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Woolworths Holdings Ltd vs. Kohls Corp
Performance |
| Timeline |
| Woolworths Holdings |
| Kohls Corp |
Woolworths Holdings and Kohls Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woolworths Holdings and Kohls Corp
The main advantage of trading using opposite Woolworths Holdings and Kohls Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woolworths Holdings position performs unexpectedly, Kohls Corp 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 Kohls Corp will offset losses from the drop in Kohls Corp's long position.The idea behind Woolworths Holdings Ltd and Kohls Corp 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.| Kohls Corp vs. Nordstrom | Kohls Corp vs. Dillards | Kohls Corp vs. Marks Spencer Group | Kohls Corp vs. Marks and Spencer |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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