Correlation Between Weis Markets and J Sainsbury

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

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

Diversification Opportunities for Weis Markets and J Sainsbury

-0.47

Correlation Coefficient

Weis Markets  J Sainsbury

Very good diversification

The 3 months correlation between Weis and JSAIY is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Weis Markets and J Sainsbury PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Sainsbury PLC and Weis Markets 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 Weis Markets are associated (or correlated) with J Sainsbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Sainsbury PLC has no effect on the direction of Weis Markets i.e., Weis Markets and J Sainsbury go up and down completely randomly.

Pair Corralation between Weis Markets and J Sainsbury

Considering the 90-day investment horizon Weis Markets is expected to generate 1.29 times more return on investment than J Sainsbury. However, Weis Markets is 1.29 times more volatile than J Sainsbury PLC. It trades about 0.07 of its potential returns per unit of risk. J Sainsbury PLC is currently generating about -0.15 per unit of risk. If you would invest  6,772  in Weis Markets on September 2, 2024 and sell it today you would earn a total of  511.00  from holding Weis Markets or generate 7.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Weis Markets  vs.  J Sainsbury PLC

Weis Markets

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Weis Markets are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady primary indicators, Weis Markets may actually be approaching a critical reversion point that can send shares even higher in January 2025.

J Sainsbury PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days J Sainsbury PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Weis Markets and J Sainsbury

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

The idea behind Weis Markets and J Sainsbury PLC 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.