Correlation Between Skyworks Solutions and Woolworths Group

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

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

Diversification Opportunities for Skyworks Solutions and Woolworths Group

-0.17

Correlation Coefficient

Skyworks Solutions  Woolworths Group

Good diversification

The 3 months correlation between Skyworks and Woolworths is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Skyworks Solutions and Woolworths Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths Group and Skyworks Solutions 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 Skyworks Solutions are associated (or correlated) with Woolworths Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths Group has no effect on the direction of Skyworks Solutions i.e., Skyworks Solutions and Woolworths Group go up and down completely randomly.

Pair Corralation between Skyworks Solutions and Woolworths Group

Given the investment horizon of 90 days Skyworks Solutions is expected to under-perform the Woolworths Group. But the stock apears to be less risky and, when comparing its historical volatility, Skyworks Solutions is 1.73 times less risky than Woolworths Group. The stock trades about -0.1 of its potential returns per unit of risk. The Woolworths Group Limited is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,341  in Woolworths Group Limited on July 1, 2024 and sell it today you would lose (156.00) from holding Woolworths Group Limited or give up 6.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.02%
Values	Daily Returns

Skyworks Solutions  vs.  Woolworths Group Limited

Skyworks Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Skyworks Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Skyworks Solutions is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Woolworths Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Woolworths Group Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Woolworths Group may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Pair Trading with Skyworks Solutions and Woolworths Group

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

The idea behind Skyworks Solutions and Woolworths Group Limited 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.