Correlation Between Grocery Outlet and Arhaus

Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and Arhaus 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 Arhaus 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 Arhaus Inc, you can compare the effects of market volatilities on Grocery Outlet and Arhaus 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 Arhaus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and Arhaus.

Diversification Opportunities for Grocery Outlet and Arhaus

0.52

Correlation Coefficient

Grocery Outlet  Arhaus

Very weak diversification

The 3 months correlation between Grocery and Arhaus is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Arhaus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arhaus Inc 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 Arhaus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arhaus Inc has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Arhaus go up and down completely randomly.

Pair Corralation between Grocery Outlet and Arhaus

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the Arhaus. But the stock apears to be less risky and, when comparing its historical volatility, Grocery Outlet Holding is 1.03 times less risky than Arhaus. The stock trades about -0.25 of its potential returns per unit of risk. The Arhaus Inc is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest  1,113  in Arhaus Inc on October 11, 2024 and sell it today you would lose (167.00) from holding Arhaus Inc or give up 15.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Grocery Outlet Holding  vs.  Arhaus Inc

Grocery Outlet Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grocery Outlet Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Grocery Outlet may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Arhaus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arhaus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Grocery Outlet and Arhaus

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

The idea behind Grocery Outlet Holding and Arhaus Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.