Correlation Between Cedar Realty and Grocery Outlet

Can any of the company-specific risk be diversified away by investing in both Cedar Realty and Grocery Outlet 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 Cedar Realty and Grocery Outlet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cedar Realty Trust and Grocery Outlet Holding, you can compare the effects of market volatilities on Cedar Realty and Grocery Outlet 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 Cedar Realty with a short position of Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cedar Realty and Grocery Outlet.

Diversification Opportunities for Cedar Realty and Grocery Outlet

0.51

Correlation Coefficient

Cedar Realty  Grocery Outlet

Very weak diversification

The 3 months correlation between Cedar and Grocery is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Realty Trust and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding and Cedar Realty 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 Cedar Realty Trust are associated (or correlated) with Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of Cedar Realty i.e., Cedar Realty and Grocery Outlet go up and down completely randomly.

Pair Corralation between Cedar Realty and Grocery Outlet

Assuming the 90 days trading horizon Cedar Realty Trust is expected to generate 0.74 times more return on investment than Grocery Outlet. However, Cedar Realty Trust is 1.35 times less risky than Grocery Outlet. It trades about 0.03 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about 0.0 per unit of risk. If you would invest  1,544  in Cedar Realty Trust on October 20, 2024 and sell it today you would earn a total of  41.00  from holding Cedar Realty Trust or generate 2.66% return on investment over 90 days.

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

Cedar Realty Trust  vs.  Grocery Outlet Holding

Cedar Realty Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cedar Realty Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cedar Realty is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Grocery Outlet Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grocery Outlet Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Grocery Outlet is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cedar Realty and Grocery Outlet

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

The idea behind Cedar Realty Trust and Grocery Outlet Holding 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.