Correlation Between Grocery Outlet and Alvarium Tiedemann

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

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

Diversification Opportunities for Grocery Outlet and Alvarium Tiedemann

0.66

Correlation Coefficient

Grocery Outlet  Alvarium Tiedemann

Poor diversification

The 3 months correlation between Grocery and Alvarium is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Alvarium Tiedemann Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alvarium Tiedemann and Grocery Outlet 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 Grocery Outlet Holding are associated (or correlated) with Alvarium Tiedemann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alvarium Tiedemann has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Alvarium Tiedemann go up and down completely randomly.

Pair Corralation between Grocery Outlet and Alvarium Tiedemann

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to generate 1.35 times more return on investment than Alvarium Tiedemann. However, Grocery Outlet is 1.35 times more volatile than Alvarium Tiedemann Holdings. It trades about -0.02 of its potential returns per unit of risk. Alvarium Tiedemann Holdings is currently generating about -0.14 per unit of risk. If you would invest  1,505  in Grocery Outlet Holding on December 29, 2024 and sell it today you would lose (208.00) from holding Grocery Outlet Holding or give up 13.82% of portfolio value over 90 days.

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

Grocery Outlet Holding  vs.  Alvarium Tiedemann Holdings

Grocery Outlet Holding

Risk-Adjusted Performance

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.

Alvarium Tiedemann

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alvarium Tiedemann Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Grocery Outlet and Alvarium Tiedemann

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

The idea behind Grocery Outlet Holding and Alvarium Tiedemann Holdings 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.