Correlation Between Grocery Outlet and Old Dominion
Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and Old Dominion 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 Old Dominion 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 Old Dominion Freight, you can compare the effects of market volatilities on Grocery Outlet and Old Dominion 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 Old Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and Old Dominion.
Diversification Opportunities for Grocery Outlet and Old Dominion
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grocery and Old is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Old Dominion Freight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Dominion Freight 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 Old Dominion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Dominion Freight has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Old Dominion go up and down completely randomly.
Pair Corralation between Grocery Outlet and Old Dominion
Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the Old Dominion. In addition to that, Grocery Outlet is 1.88 times more volatile than Old Dominion Freight. It trades about -0.45 of its total potential returns per unit of risk. Old Dominion Freight is currently generating about -0.65 per unit of volatility. If you would invest 22,484 in Old Dominion Freight on September 25, 2024 and sell it today you would lose (4,327) from holding Old Dominion Freight or give up 19.24% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Grocery Outlet Holding vs. Old Dominion Freight
Performance |
Timeline |
Grocery Outlet Holding |
Old Dominion Freight |
Grocery Outlet and Old Dominion Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Grocery Outlet and Old Dominion
The main advantage of trading using opposite Grocery Outlet and Old Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet position performs unexpectedly, Old Dominion 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 Old Dominion will offset losses from the drop in Old Dominion's long position.Grocery Outlet vs. Natural Grocers by | Grocery Outlet vs. Village Super Market | Grocery Outlet vs. Ingles Markets Incorporated | Grocery Outlet vs. Ocado Group plc |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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