Correlation Between Albertsons Companies and Weis Markets

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

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

Diversification Opportunities for Albertsons Companies and Weis Markets

0.72

Correlation Coefficient

Albertsons Companies  Weis Markets

Poor diversification

The 3 months correlation between Albertsons and Weis is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Albertsons Companies and Weis Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weis Markets 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 Weis Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weis Markets has no effect on the direction of Albertsons Companies i.e., Albertsons Companies and Weis Markets go up and down completely randomly.

Pair Corralation between Albertsons Companies and Weis Markets

Considering the 90-day investment horizon Albertsons Companies is expected to generate 7.48 times less return on investment than Weis Markets. But when comparing it to its historical volatility, Albertsons Companies is 1.47 times less risky than Weis Markets. It trades about 0.01 of its potential returns per unit of risk. Weis Markets is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6,727  in Weis Markets on August 30, 2024 and sell it today you would earn a total of  552.00  from holding Weis Markets or generate 8.21% return on investment over 90 days.

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

Albertsons Companies  vs.  Weis Markets

Albertsons Companies

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Albertsons Companies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Albertsons Companies is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Weis Markets

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Weis Markets are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak primary indicators, Weis Markets may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Albertsons Companies and Weis Markets

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

The idea behind Albertsons Companies and Weis Markets 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.

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.