Correlation Between Woolworths and Dicker Data
Can any of the company-specific risk be diversified away by investing in both Woolworths and Dicker Data 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 Dicker Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woolworths and Dicker Data, you can compare the effects of market volatilities on Woolworths and Dicker Data 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 Dicker Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woolworths and Dicker Data.
Diversification Opportunities for Woolworths and Dicker Data
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Woolworths and Dicker is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Woolworths and Dicker Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dicker Data 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 Dicker Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dicker Data has no effect on the direction of Woolworths i.e., Woolworths and Dicker Data go up and down completely randomly.
Pair Corralation between Woolworths and Dicker Data
Assuming the 90 days trading horizon Woolworths is expected to generate 0.42 times more return on investment than Dicker Data. However, Woolworths is 2.38 times less risky than Dicker Data. It trades about 0.05 of its potential returns per unit of risk. Dicker Data is currently generating about 0.0 per unit of risk. If you would invest 2,996 in Woolworths on September 1, 2024 and sell it today you would earn a total of 22.00 from holding Woolworths or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woolworths vs. Dicker Data
Performance |
| Timeline |
| Woolworths |
| Dicker Data |
Woolworths and Dicker Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woolworths and Dicker Data
The main advantage of trading using opposite Woolworths and Dicker Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woolworths position performs unexpectedly, Dicker Data 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 Dicker Data will offset losses from the drop in Dicker Data's long position.| Woolworths vs. Hutchison Telecommunications | Woolworths vs. Iron Road | Woolworths vs. Flagship Investments | Woolworths vs. A1 Investments Resources |
| Dicker Data vs. K2 Asset Management | Dicker Data vs. Homeco Daily Needs | Dicker Data vs. Home Consortium | Dicker Data vs. Alternative Investment Trust |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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