Correlation Between Woolworths Group and Perseus Mining
Can any of the company-specific risk be diversified away by investing in both Woolworths Group and Perseus Mining 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 Perseus Mining 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 Perseus Mining Limited, you can compare the effects of market volatilities on Woolworths Group and Perseus Mining 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 Perseus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woolworths Group and Perseus Mining.
Diversification Opportunities for Woolworths Group and Perseus Mining
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Woolworths and Perseus is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Woolworths Group Limited and Perseus Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perseus Mining 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 Perseus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perseus Mining has no effect on the direction of Woolworths Group i.e., Woolworths Group and Perseus Mining go up and down completely randomly.
Pair Corralation between Woolworths Group and Perseus Mining
Assuming the 90 days horizon Woolworths Group Limited is expected to under-perform the Perseus Mining. But the stock apears to be less risky and, when comparing its historical volatility, Woolworths Group Limited is 2.15 times less risky than Perseus Mining. The stock trades about -0.03 of its potential returns per unit of risk. The Perseus Mining Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 101.00 in Perseus Mining Limited on September 12, 2024 and sell it today you would earn a total of 69.00 from holding Perseus Mining Limited or generate 68.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woolworths Group Limited vs. Perseus Mining Limited
Performance |
| Timeline |
| Woolworths Group |
| Perseus Mining |
Woolworths Group and Perseus Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woolworths Group and Perseus Mining
The main advantage of trading using opposite Woolworths Group and Perseus Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woolworths Group position performs unexpectedly, Perseus Mining 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 Perseus Mining will offset losses from the drop in Perseus Mining's long position.| Woolworths Group vs. Perseus Mining Limited | Woolworths Group vs. SWISS WATER DECAFFCOFFEE | Woolworths Group vs. Check Point Software | Woolworths Group vs. AXWAY SOFTWARE EO |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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