Correlation Between Albertsons Companies and Ocado Group

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

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

Diversification Opportunities for Albertsons Companies and Ocado Group

-0.71

Correlation Coefficient

Albertsons Companies  Ocado Group

Pay attention - limited upside

The 3 months correlation between Albertsons and Ocado is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Albertsons Companies and Ocado Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocado Group plc 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 Ocado Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocado Group plc has no effect on the direction of Albertsons Companies i.e., Albertsons Companies and Ocado Group go up and down completely randomly.

Pair Corralation between Albertsons Companies and Ocado Group

Considering the 90-day investment horizon Albertsons Companies is expected to generate 0.46 times more return on investment than Ocado Group. However, Albertsons Companies is 2.2 times less risky than Ocado Group. It trades about -0.02 of its potential returns per unit of risk. Ocado Group plc is currently generating about -0.01 per unit of risk. If you would invest  1,888  in Albertsons Companies on September 12, 2024 and sell it today you would lose (37.00) from holding Albertsons Companies or give up 1.96% of portfolio value over 90 days.

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

Albertsons Companies  vs.  Ocado Group plc

Albertsons Companies

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Albertsons Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Albertsons Companies is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Ocado Group plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocado Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Ocado Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Albertsons Companies and Ocado Group

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

The idea behind Albertsons Companies and Ocado Group 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.