Correlation Between Grocery Outlet and CROWN

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

Diversification Opportunities for Grocery Outlet and CROWN

0.1

Correlation Coefficient

Grocery Outlet  CROWN

Average diversification

The 3 months correlation between Grocery and CROWN is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and CROWN CASTLE INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CROWN CASTLE INTL 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 CROWN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CROWN CASTLE INTL has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and CROWN go up and down completely randomly.

Pair Corralation between Grocery Outlet and CROWN

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the CROWN. In addition to that, Grocery Outlet is 23.85 times more volatile than CROWN CASTLE INTL. It trades about -0.04 of its total potential returns per unit of risk. CROWN CASTLE INTL is currently generating about 0.04 per unit of volatility. If you would invest  9,621  in CROWN CASTLE INTL on December 23, 2024 and sell it today you would earn a total of  44.00  from holding CROWN CASTLE INTL or generate 0.46% return on investment over 90 days.

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

Grocery Outlet Holding  vs.  CROWN CASTLE INTL

Grocery Outlet Holding

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

CROWN CASTLE INTL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CROWN CASTLE INTL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CROWN is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grocery Outlet and CROWN

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

The idea behind Grocery Outlet Holding and CROWN CASTLE INTL 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.