Correlation Between Woolworths Group and Ocado Group
Can any of the company-specific risk be diversified away by investing in both Woolworths Group 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 Woolworths Group and Ocado Group 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 Ocado Group plc, you can compare the effects of market volatilities on Woolworths Group 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 Woolworths Group with a short position of Ocado Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woolworths Group and Ocado Group.
Diversification Opportunities for Woolworths Group and Ocado Group
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Woolworths and Ocado is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Woolworths Group Limited 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 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 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 Woolworths Group i.e., Woolworths Group and Ocado Group go up and down completely randomly.
Pair Corralation between Woolworths Group and Ocado Group
Assuming the 90 days horizon Woolworths Group Limited is expected to generate 1.74 times more return on investment than Ocado Group. However, Woolworths Group is 1.74 times more volatile than Ocado Group plc. It trades about -0.22 of its potential returns per unit of risk. Ocado Group plc is currently generating about -0.51 per unit of risk. If you would invest 2,154 in Woolworths Group Limited on August 27, 2024 and sell it today you would lose (320.00) from holding Woolworths Group Limited or give up 14.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woolworths Group Limited vs. Ocado Group plc
Performance |
| Timeline |
| Woolworths Group |
| Ocado Group plc |
Woolworths Group and Ocado Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woolworths Group and Ocado Group
The main advantage of trading using opposite Woolworths Group and Ocado Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woolworths Group 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.| Woolworths Group vs. Tesco PLC | Woolworths Group vs. Tesco PLC | Woolworths Group vs. Ocado Group PLC | Woolworths Group vs. Dairy Farm International |
| Ocado Group vs. Natural Grocers by | Ocado Group vs. Grocery Outlet Holding | Ocado Group vs. Village Super Market | Ocado Group 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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