Correlation Between Woolworths Group and Carrefour
Can any of the company-specific risk be diversified away by investing in both Woolworths Group and Carrefour 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 Group and Carrefour into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woolworths Group Limited and Carrefour SA PK, you can compare the effects of market volatilities on Woolworths Group and Carrefour 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 Group with a short position of Carrefour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woolworths Group and Carrefour.
Diversification Opportunities for Woolworths Group and Carrefour
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Woolworths and Carrefour is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Woolworths Group Limited and Carrefour SA PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carrefour SA PK and Woolworths Group 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 Group Limited are associated (or correlated) with Carrefour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carrefour SA PK has no effect on the direction of Woolworths Group i.e., Woolworths Group and Carrefour go up and down completely randomly.
Pair Corralation between Woolworths Group and Carrefour
Assuming the 90 days horizon Woolworths Group Limited is expected to under-perform the Carrefour. In addition to that, Woolworths Group is 1.42 times more volatile than Carrefour SA PK. It trades about -0.22 of its total potential returns per unit of risk. Carrefour SA PK is currently generating about -0.05 per unit of volatility. If you would invest 313.00 in Carrefour SA PK on August 28, 2024 and sell it today you would lose (9.00) from holding Carrefour SA PK or give up 2.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woolworths Group Limited vs. Carrefour SA PK
Performance |
| Timeline |
| Woolworths Group |
| Carrefour SA PK |
Woolworths Group and Carrefour Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woolworths Group and Carrefour
The main advantage of trading using opposite Woolworths Group and Carrefour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woolworths Group position performs unexpectedly, Carrefour 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 Carrefour will offset losses from the drop in Carrefour's long position.| Woolworths Group vs. Natural Grocers by | Woolworths Group vs. Grocery Outlet Holding | Woolworths Group vs. Village Super Market | Woolworths Group vs. Ingles Markets Incorporated |
| Carrefour vs. Natural Grocers by | Carrefour vs. Grocery Outlet Holding | Carrefour vs. Village Super Market | Carrefour 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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