Correlation Between Shufersal and Willy Food

Can any of the company-specific risk be diversified away by investing in both Shufersal and Willy Food 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 Shufersal and Willy Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shufersal and Willy Food, you can compare the effects of market volatilities on Shufersal and Willy Food 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 Shufersal with a short position of Willy Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shufersal and Willy Food.

Diversification Opportunities for Shufersal and Willy Food

0.84

Correlation Coefficient

Shufersal  Willy Food

Very poor diversification

The 3 months correlation between Shufersal and Willy is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Shufersal and Willy Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willy Food and Shufersal 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 Shufersal are associated (or correlated) with Willy Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willy Food has no effect on the direction of Shufersal i.e., Shufersal and Willy Food go up and down completely randomly.

Pair Corralation between Shufersal and Willy Food

Assuming the 90 days trading horizon Shufersal is expected to generate 1.53 times less return on investment than Willy Food. But when comparing it to its historical volatility, Shufersal is 2.08 times less risky than Willy Food. It trades about 0.31 of its potential returns per unit of risk. Willy Food is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  198,300  in Willy Food on September 15, 2024 and sell it today you would earn a total of  66,600  from holding Willy Food or generate 33.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Shufersal  vs.  Willy Food

Shufersal

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shufersal are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Shufersal sustained solid returns over the last few months and may actually be approaching a breakup point.

Willy Food

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Willy Food are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Willy Food sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shufersal and Willy Food

The main advantage of trading using opposite Shufersal and Willy Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shufersal position performs unexpectedly, Willy Food 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 Willy Food will offset losses from the drop in Willy Food's long position.

The idea behind Shufersal and Willy Food pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.