Correlation Between Woolworths and Suncorp
Can any of the company-specific risk be diversified away by investing in both Woolworths and Suncorp 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 Suncorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woolworths and Suncorp Group, you can compare the effects of market volatilities on Woolworths and Suncorp 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 Suncorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woolworths and Suncorp.
Diversification Opportunities for Woolworths and Suncorp
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Woolworths and Suncorp is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Woolworths and Suncorp Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncorp Group 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 Suncorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suncorp Group has no effect on the direction of Woolworths i.e., Woolworths and Suncorp go up and down completely randomly.
Pair Corralation between Woolworths and Suncorp
Assuming the 90 days trading horizon Woolworths is expected to under-perform the Suncorp. But the stock apears to be less risky and, when comparing its historical volatility, Woolworths is 1.11 times less risky than Suncorp. The stock trades about -0.06 of its potential returns per unit of risk. The Suncorp Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,322 in Suncorp Group on September 24, 2024 and sell it today you would earn a total of 548.00 from holding Suncorp Group or generate 41.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Woolworths vs. Suncorp Group
Performance |
Timeline |
Woolworths |
Suncorp Group |
Woolworths and Suncorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Woolworths and Suncorp
The main advantage of trading using opposite Woolworths and Suncorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woolworths position performs unexpectedly, Suncorp 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 Suncorp will offset losses from the drop in Suncorp's long position.Woolworths vs. Aneka Tambang Tbk | Woolworths vs. BHP Group Limited | Woolworths vs. Commonwealth Bank of | Woolworths vs. Commonwealth Bank of |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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