Correlation Between Clean Seas and Albertsons Companies

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

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

Diversification Opportunities for Clean Seas and Albertsons Companies

-0.58

Correlation Coefficient

Clean Seas  Albertsons Companies

Excellent diversification

The 3 months correlation between Clean and Albertsons is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Clean Seas Seafood and Albertsons Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albertsons Companies and Clean Seas 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 Clean Seas Seafood are associated (or correlated) with Albertsons Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albertsons Companies has no effect on the direction of Clean Seas i.e., Clean Seas and Albertsons Companies go up and down completely randomly.

Pair Corralation between Clean Seas and Albertsons Companies

Assuming the 90 days horizon Clean Seas Seafood is expected to under-perform the Albertsons Companies. In addition to that, Clean Seas is 3.89 times more volatile than Albertsons Companies. It trades about -0.08 of its total potential returns per unit of risk. Albertsons Companies is currently generating about 0.0 per unit of volatility. If you would invest  2,055  in Albertsons Companies on October 25, 2024 and sell it today you would lose (77.00) from holding Albertsons Companies or give up 3.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Clean Seas Seafood  vs.  Albertsons Companies

Clean Seas Seafood

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Seas Seafood 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 basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Albertsons Companies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Albertsons Companies are ranked lower than 7 (%) 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.

Pair Trading with Clean Seas and Albertsons Companies

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

The idea behind Clean Seas Seafood and Albertsons Companies 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.