Correlation Between J Sainsbury and Metro
Can any of the company-specific risk be diversified away by investing in both J Sainsbury and Metro 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 J Sainsbury and Metro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between J Sainsbury PLC and Metro Inc, you can compare the effects of market volatilities on J Sainsbury and Metro 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 J Sainsbury with a short position of Metro. Check out your portfolio center. Please also check ongoing floating volatility patterns of J Sainsbury and Metro.
Diversification Opportunities for J Sainsbury and Metro
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between JSAIY and Metro is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding J Sainsbury PLC and Metro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Inc and J Sainsbury 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 J Sainsbury PLC are associated (or correlated) with Metro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Inc has no effect on the direction of J Sainsbury i.e., J Sainsbury and Metro go up and down completely randomly.
Pair Corralation between J Sainsbury and Metro
Assuming the 90 days horizon J Sainsbury PLC is expected to generate 1.45 times more return on investment than Metro. However, J Sainsbury is 1.45 times more volatile than Metro Inc. It trades about 0.01 of its potential returns per unit of risk. Metro Inc is currently generating about -0.02 per unit of risk. If you would invest 1,311 in J Sainsbury PLC on January 19, 2024 and sell it today you would lose (2.00) from holding J Sainsbury PLC or give up 0.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
J Sainsbury PLC vs. Metro Inc
Performance |
| Timeline |
| J Sainsbury PLC |
| Metro Inc |
J Sainsbury and Metro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J Sainsbury and Metro
The main advantage of trading using opposite J Sainsbury and Metro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J Sainsbury position performs unexpectedly, Metro 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 Metro will offset losses from the drop in Metro's long position.| J Sainsbury vs. Natural Grocers by | J Sainsbury vs. Grocery Outlet Holding | J Sainsbury vs. Village Super Market | J Sainsbury vs. Ingles Markets Incorporated |
| Metro vs. Mannatech Incorporated | Metro vs. Edgewell Personal Care | Metro vs. Inter Parfums | Metro vs. Nu Skin Enterprises |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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