Correlation Between Woolworths and Duxton Broadacre
Can any of the company-specific risk be diversified away by investing in both Woolworths and Duxton Broadacre 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 and Duxton Broadacre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woolworths and Duxton Broadacre Farms, you can compare the effects of market volatilities on Woolworths and Duxton Broadacre 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 with a short position of Duxton Broadacre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woolworths and Duxton Broadacre.
Diversification Opportunities for Woolworths and Duxton Broadacre
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Woolworths and Duxton is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Woolworths and Duxton Broadacre Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duxton Broadacre Farms and Woolworths 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 are associated (or correlated) with Duxton Broadacre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duxton Broadacre Farms has no effect on the direction of Woolworths i.e., Woolworths and Duxton Broadacre go up and down completely randomly.
Pair Corralation between Woolworths and Duxton Broadacre
Assuming the 90 days trading horizon Woolworths is expected to generate 1.5 times less return on investment than Duxton Broadacre. But when comparing it to its historical volatility, Woolworths is 2.93 times less risky than Duxton Broadacre. It trades about 0.22 of its potential returns per unit of risk. Duxton Broadacre Farms is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 137.00 in Duxton Broadacre Farms on November 27, 2024 and sell it today you would earn a total of 7.00 from holding Duxton Broadacre Farms or generate 5.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woolworths vs. Duxton Broadacre Farms
Performance |
| Timeline |
| Woolworths |
| Duxton Broadacre Farms |
Woolworths and Duxton Broadacre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woolworths and Duxton Broadacre
The main advantage of trading using opposite Woolworths and Duxton Broadacre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woolworths position performs unexpectedly, Duxton Broadacre 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 Duxton Broadacre will offset losses from the drop in Duxton Broadacre's long position.| Woolworths vs. Tambourah Metals | Woolworths vs. Nufarm Finance NZ | Woolworths vs. Catalyst Metals | Woolworths vs. Australian Agricultural |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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