Correlation Between Woolworths Holdings and Lenta PLC
Can any of the company-specific risk be diversified away by investing in both Woolworths Holdings and Lenta PLC 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 Lenta PLC 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 Lenta PLC, you can compare the effects of market volatilities on Woolworths Holdings and Lenta PLC 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 Lenta PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woolworths Holdings and Lenta PLC.
Diversification Opportunities for Woolworths Holdings and Lenta PLC
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Woolworths and Lenta is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Woolworths Holdings Ltd and Lenta PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lenta PLC 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 Lenta PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lenta PLC has no effect on the direction of Woolworths Holdings i.e., Woolworths Holdings and Lenta PLC go up and down completely randomly.
Pair Corralation between Woolworths Holdings and Lenta PLC
If you would invest 367.00 in Woolworths Holdings Ltd on August 28, 2024 and sell it today you would earn a total of 31.00 from holding Woolworths Holdings Ltd or generate 8.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 1.44% |
| Values | Daily Returns |
Woolworths Holdings Ltd vs. Lenta PLC
Performance |
| Timeline |
| Woolworths Holdings |
| Lenta PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Woolworths Holdings and Lenta PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woolworths Holdings and Lenta PLC
The main advantage of trading using opposite Woolworths Holdings and Lenta PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woolworths Holdings position performs unexpectedly, Lenta PLC 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 Lenta PLC will offset losses from the drop in Lenta PLC's long position.The idea behind Woolworths Holdings Ltd and Lenta 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.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |