Correlation Between Woolworths Group and J Sainsbury
Can any of the company-specific risk be diversified away by investing in both Woolworths Group and J Sainsbury 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 J Sainsbury 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 J Sainsbury plc, you can compare the effects of market volatilities on Woolworths Group and J Sainsbury 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 J Sainsbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woolworths Group and J Sainsbury.
Diversification Opportunities for Woolworths Group and J Sainsbury
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Woolworths and JSNSF is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Woolworths Group Limited and J Sainsbury plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Sainsbury plc 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 J Sainsbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Sainsbury plc has no effect on the direction of Woolworths Group i.e., Woolworths Group and J Sainsbury go up and down completely randomly.
Pair Corralation between Woolworths Group and J Sainsbury
Assuming the 90 days horizon Woolworths Group Limited is expected to under-perform the J Sainsbury. In addition to that, Woolworths Group is 1.06 times more volatile than J Sainsbury plc. It trades about -0.01 of its total potential returns per unit of risk. J Sainsbury plc is currently generating about 0.03 per unit of volatility. If you would invest 339.00 in J Sainsbury plc on August 28, 2024 and sell it today you would earn a total of 16.00 from holding J Sainsbury plc or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 71.95% |
| Values | Daily Returns |
Woolworths Group Limited vs. J Sainsbury plc
Performance |
| Timeline |
| Woolworths Group |
| J Sainsbury plc |
Woolworths Group and J Sainsbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woolworths Group and J Sainsbury
The main advantage of trading using opposite Woolworths Group and J Sainsbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woolworths Group position performs unexpectedly, J Sainsbury 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 J Sainsbury will offset losses from the drop in J Sainsbury'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 |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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