Correlation Between Albertsons Companies and Launch One

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

By analyzing existing cross correlation between Albertsons Companies and Launch One Acquisition, you can compare the effects of market volatilities on Albertsons Companies and Launch One 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 Launch One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albertsons Companies and Launch One.

Diversification Opportunities for Albertsons Companies and Launch One

-0.21

Correlation Coefficient

Albertsons Companies  Launch One

Very good diversification

The 3 months correlation between Albertsons and Launch is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Albertsons Companies and Launch One Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Launch One Acquisition 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 Launch One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Launch One Acquisition has no effect on the direction of Albertsons Companies i.e., Albertsons Companies and Launch One go up and down completely randomly.

Pair Corralation between Albertsons Companies and Launch One

Considering the 90-day investment horizon Albertsons Companies is expected to generate 642.77 times less return on investment than Launch One. But when comparing it to its historical volatility, Albertsons Companies is 15.07 times less risky than Launch One. It trades about 0.0 of its potential returns per unit of risk. Launch One Acquisition is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Launch One Acquisition on October 11, 2024 and sell it today you would earn a total of  6.00  from holding Launch One Acquisition or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	10.91%
Values	Daily Returns

Albertsons Companies  vs.  Launch One Acquisition

Albertsons Companies

Risk-Adjusted Performance

8 of 100

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 February 2025.

Launch One Acquisition

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Launch One Acquisition are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Launch One showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Albertsons Companies and Launch One

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

The idea behind Albertsons Companies and Launch One Acquisition 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.