Correlation Between Grocery Outlet and Chart Industries

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

Diversification Opportunities for Grocery Outlet and Chart Industries

0.51

Correlation Coefficient

Grocery Outlet  Chart Industries

Very weak diversification

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

Pair Corralation between Grocery Outlet and Chart Industries

Allowing for the 90-day total investment horizon Grocery Outlet is expected to generate 7.11 times less return on investment than Chart Industries. In addition to that, Grocery Outlet is 1.67 times more volatile than Chart Industries. It trades about 0.02 of its total potential returns per unit of risk. Chart Industries is currently generating about 0.29 per unit of volatility. If you would invest  5,071  in Chart Industries on October 9, 2024 and sell it today you would earn a total of  2,590  from holding Chart Industries or generate 51.07% return on investment over 90 days.

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

Grocery Outlet Holding  vs.  Chart Industries

Grocery Outlet Holding

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grocery Outlet Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Chart Industries

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chart Industries are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Chart Industries sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grocery Outlet and Chart Industries

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

The idea behind Grocery Outlet Holding and Chart Industries 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.