Correlation Between Taylor Wimpey and J Sainsbury

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

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

Diversification Opportunities for Taylor Wimpey and J Sainsbury

-0.09

Correlation Coefficient

Taylor Wimpey  J Sainsbury

Good diversification

The 3 months correlation between Taylor and JSNSF is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Taylor Wimpey plc 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 Taylor Wimpey 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 Taylor Wimpey plc 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 Taylor Wimpey i.e., Taylor Wimpey and J Sainsbury go up and down completely randomly.

Pair Corralation between Taylor Wimpey and J Sainsbury

Assuming the 90 days horizon Taylor Wimpey plc is expected to under-perform the J Sainsbury. But the pink sheet apears to be less risky and, when comparing its historical volatility, Taylor Wimpey plc is 2.18 times less risky than J Sainsbury. The pink sheet trades about -0.08 of its potential returns per unit of risk. The J Sainsbury plc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  343.00  in J Sainsbury plc on May 3, 2025 and sell it today you would earn a total of  95.00  from holding J Sainsbury plc or generate 27.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Taylor Wimpey plc  vs.  J Sainsbury plc

Taylor Wimpey plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Taylor Wimpey plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

J Sainsbury plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in J Sainsbury plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, J Sainsbury reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Taylor Wimpey and J Sainsbury

The main advantage of trading using opposite Taylor Wimpey and J Sainsbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taylor Wimpey 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 Taylor Wimpey plc 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.