Correlation Between Albertsons Companies and Dingdong ADR

Can any of the company-specific risk be diversified away by investing in both Albertsons Companies and Dingdong ADR 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 Albertsons Companies and Dingdong ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Albertsons Companies and Dingdong ADR, you can compare the effects of market volatilities on Albertsons Companies and Dingdong ADR 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 Albertsons Companies with a short position of Dingdong ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albertsons Companies and Dingdong ADR.

Diversification Opportunities for Albertsons Companies and Dingdong ADR

-0.5

Correlation Coefficient

Albertsons Companies  Dingdong ADR

Very good diversification

The 3 months correlation between Albertsons and Dingdong is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Albertsons Companies and Dingdong ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dingdong ADR and Albertsons Companies 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 Albertsons Companies are associated (or correlated) with Dingdong ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dingdong ADR has no effect on the direction of Albertsons Companies i.e., Albertsons Companies and Dingdong ADR go up and down completely randomly.

Pair Corralation between Albertsons Companies and Dingdong ADR

Considering the 90-day investment horizon Albertsons Companies is expected to generate 0.41 times more return on investment than Dingdong ADR. However, Albertsons Companies is 2.46 times less risky than Dingdong ADR. It trades about 0.11 of its potential returns per unit of risk. Dingdong ADR is currently generating about -0.08 per unit of risk. If you would invest  1,947  in Albertsons Companies on December 30, 2024 and sell it today you would earn a total of  215.00  from holding Albertsons Companies or generate 11.04% return on investment over 90 days.

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

Albertsons Companies  vs.  Dingdong ADR

Albertsons Companies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Albertsons Companies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating fundamental indicators, Albertsons Companies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Dingdong ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dingdong ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Albertsons Companies and Dingdong ADR

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

The idea behind Albertsons Companies and Dingdong ADR 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.