Correlation Between Woolworths and Global Health
Can any of the company-specific risk be diversified away by investing in both Woolworths and Global Health 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 Global Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woolworths and Global Health, you can compare the effects of market volatilities on Woolworths and Global Health 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 Global Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woolworths and Global Health.
Diversification Opportunities for Woolworths and Global Health
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Woolworths and Global is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Woolworths and Global Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Health 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 Global Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Health has no effect on the direction of Woolworths i.e., Woolworths and Global Health go up and down completely randomly.
Pair Corralation between Woolworths and Global Health
Assuming the 90 days trading horizon Woolworths is expected to under-perform the Global Health. But the stock apears to be less risky and, when comparing its historical volatility, Woolworths is 4.59 times less risky than Global Health. The stock trades about -0.05 of its potential returns per unit of risk. The Global Health is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Global Health on September 2, 2024 and sell it today you would earn a total of 1.00 from holding Global Health or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woolworths vs. Global Health
Performance |
| Timeline |
| Woolworths |
| Global Health |
Woolworths and Global Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woolworths and Global Health
The main advantage of trading using opposite Woolworths and Global Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woolworths position performs unexpectedly, Global Health 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 Global Health will offset losses from the drop in Global Health's long position.| Woolworths vs. Skycity Entertainment Group | Woolworths vs. Charter Hall Retail | Woolworths vs. oOhMedia | Woolworths vs. Phoslock Environmental Technologies |
| Global Health vs. Sandon Capital Investments | Global Health vs. Macquarie Technology Group | Global Health vs. BKI Investment | Global Health vs. MFF Capital Investments |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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