Correlation Between Grocery Outlet and Enviri

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

Diversification Opportunities for Grocery Outlet and Enviri

-0.32

Correlation Coefficient

Grocery Outlet  Enviri

Very good diversification

The 3 months correlation between Grocery and Enviri is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Enviri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enviri 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 Enviri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enviri has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Enviri go up and down completely randomly.

Pair Corralation between Grocery Outlet and Enviri

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the Enviri. But the stock apears to be less risky and, when comparing its historical volatility, Grocery Outlet Holding is 1.34 times less risky than Enviri. The stock trades about -0.05 of its potential returns per unit of risk. The Enviri is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  825.00  in Enviri on October 25, 2024 and sell it today you would earn a total of  104.00  from holding Enviri or generate 12.61% return on investment over 90 days.

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

Grocery Outlet Holding  vs.  Enviri

Grocery Outlet Holding

Risk-Adjusted Performance

0 of 100

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.

Enviri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enviri has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Enviri is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Grocery Outlet and Enviri

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

The idea behind Grocery Outlet Holding and Enviri 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.