Correlation Between Grocery Outlet and Radcom

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

Diversification Opportunities for Grocery Outlet and Radcom

0.49

Correlation Coefficient

Grocery Outlet  Radcom

Very weak diversification

The 3 months correlation between Grocery and Radcom is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Radcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radcom 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 Radcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radcom has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Radcom go up and down completely randomly.

Pair Corralation between Grocery Outlet and Radcom

Allowing for the 90-day total investment horizon Grocery Outlet is expected to generate 3.32 times less return on investment than Radcom. In addition to that, Grocery Outlet is 1.16 times more volatile than Radcom. It trades about 0.02 of its total potential returns per unit of risk. Radcom is currently generating about 0.09 per unit of volatility. If you would invest  1,000.00  in Radcom on October 5, 2024 and sell it today you would earn a total of  166.00  from holding Radcom or generate 16.6% return on investment over 90 days.

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

Grocery Outlet Holding  vs.  Radcom

Grocery Outlet Holding

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grocery Outlet Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Radcom

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Radcom are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Radcom displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grocery Outlet and Radcom

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

The idea behind Grocery Outlet Holding and Radcom 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.