Correlation Between Woolworths and Event Hospitality
Can any of the company-specific risk be diversified away by investing in both Woolworths and Event Hospitality 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 Event Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woolworths and Event Hospitality and, you can compare the effects of market volatilities on Woolworths and Event Hospitality 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 Event Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woolworths and Event Hospitality.
Diversification Opportunities for Woolworths and Event Hospitality
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Woolworths and Event is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Woolworths and Event Hospitality and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Event Hospitality 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 Event Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Event Hospitality has no effect on the direction of Woolworths i.e., Woolworths and Event Hospitality go up and down completely randomly.
Pair Corralation between Woolworths and Event Hospitality
Assuming the 90 days trading horizon Woolworths is expected to generate 5.75 times less return on investment than Event Hospitality. But when comparing it to its historical volatility, Woolworths is 1.48 times less risky than Event Hospitality. It trades about 0.05 of its potential returns per unit of risk. Event Hospitality and is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,093 in Event Hospitality and on September 1, 2024 and sell it today you would earn a total of 49.00 from holding Event Hospitality and or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woolworths vs. Event Hospitality and
Performance |
| Timeline |
| Woolworths |
| Event Hospitality |
Woolworths and Event Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woolworths and Event Hospitality
The main advantage of trading using opposite Woolworths and Event Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woolworths position performs unexpectedly, Event Hospitality 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 Event Hospitality will offset losses from the drop in Event Hospitality's long position.| Woolworths vs. Hutchison Telecommunications | Woolworths vs. Iron Road | Woolworths vs. Flagship Investments | Woolworths vs. A1 Investments Resources |
| Event Hospitality vs. iShares Global Healthcare | Event Hospitality vs. Australian Dairy Farms | Event Hospitality vs. Adriatic Metals Plc | Event Hospitality vs. Australian Agricultural |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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