Correlation Between Grocery Outlet and Primerica

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

Diversification Opportunities for Grocery Outlet and Primerica

0.8

Correlation Coefficient

Grocery Outlet  Primerica

Very poor diversification

The 3 months correlation between Grocery and Primerica is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Primerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primerica 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 Primerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primerica has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Primerica go up and down completely randomly.

Pair Corralation between Grocery Outlet and Primerica

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the Primerica. In addition to that, Grocery Outlet is 2.96 times more volatile than Primerica. It trades about 0.0 of its total potential returns per unit of risk. Primerica is currently generating about 0.08 per unit of volatility. If you would invest  27,609  in Primerica on October 20, 2024 and sell it today you would earn a total of  1,605  from holding Primerica or generate 5.81% return on investment over 90 days.

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

Grocery Outlet Holding  vs.  Primerica

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.

Primerica

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Primerica are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Primerica may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Grocery Outlet and Primerica

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

The idea behind Grocery Outlet Holding and Primerica 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.