Correlation Between Grocery Outlet and Maison Solutions

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

Diversification Opportunities for Grocery Outlet and Maison Solutions

-0.12

Correlation Coefficient

Grocery Outlet  Maison Solutions

Good diversification

The 3 months correlation between Grocery and Maison is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Maison Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maison Solutions 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 Maison Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maison Solutions has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Maison Solutions go up and down completely randomly.

Pair Corralation between Grocery Outlet and Maison Solutions

Allowing for the 90-day total investment horizon Grocery Outlet is expected to generate 2.36 times less return on investment than Maison Solutions. But when comparing it to its historical volatility, Grocery Outlet Holding is 4.47 times less risky than Maison Solutions. It trades about 0.09 of its potential returns per unit of risk. Maison Solutions is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  100.00  in Maison Solutions on September 3, 2024 and sell it today you would lose (6.00) from holding Maison Solutions or give up 6.0% of portfolio value over 90 days.

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

Grocery Outlet Holding  vs.  Maison Solutions

Grocery Outlet Holding

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grocery Outlet Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Grocery Outlet displayed solid returns over the last few months and may actually be approaching a breakup point.

Maison Solutions

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Maison Solutions are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Maison Solutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grocery Outlet and Maison Solutions

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

The idea behind Grocery Outlet Holding and Maison Solutions 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.

Check out your portfolio center.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..