Correlation Between Grocery Outlet and Ingles Markets

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

Diversification Opportunities for Grocery Outlet and Ingles Markets

0.78

Correlation Coefficient

Grocery Outlet  Ingles Markets

Poor diversification

The 3 months correlation between Grocery and Ingles is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Ingles Markets Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingles Markets 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 Ingles Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingles Markets has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Ingles Markets go up and down completely randomly.

Pair Corralation between Grocery Outlet and Ingles Markets

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the Ingles Markets. In addition to that, Grocery Outlet is 3.46 times more volatile than Ingles Markets Incorporated. It trades about -0.02 of its total potential returns per unit of risk. Ingles Markets Incorporated is currently generating about 0.01 per unit of volatility. If you would invest  6,354  in Ingles Markets Incorporated on December 29, 2024 and sell it today you would earn a total of  25.00  from holding Ingles Markets Incorporated or generate 0.39% return on investment over 90 days.

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

Grocery Outlet Holding  vs.  Ingles Markets Incorporated

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.

Ingles Markets

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ingles Markets Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ingles Markets is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grocery Outlet and Ingles Markets

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

The idea behind Grocery Outlet Holding and Ingles Markets Incorporated 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.