Correlation Between Grocery Outlet and 629377CL4

Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and 629377CL4 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 629377CL4 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 US629377CL46, you can compare the effects of market volatilities on Grocery Outlet and 629377CL4 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 629377CL4. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and 629377CL4.

Diversification Opportunities for Grocery Outlet and 629377CL4

-0.03

Correlation Coefficient

Grocery Outlet  629377CL4

Good diversification

The 3 months correlation between Grocery and 629377CL4 is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and US629377CL46 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US629377CL46 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 629377CL4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US629377CL46 has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and 629377CL4 go up and down completely randomly.

Pair Corralation between Grocery Outlet and 629377CL4

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to generate 4.83 times more return on investment than 629377CL4. However, Grocery Outlet is 4.83 times more volatile than US629377CL46. It trades about 0.07 of its potential returns per unit of risk. US629377CL46 is currently generating about -0.06 per unit of risk. If you would invest  1,456  in Grocery Outlet Holding on October 6, 2024 and sell it today you would earn a total of  111.00  from holding Grocery Outlet Holding or generate 7.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.61%
Values	Daily Returns

Grocery Outlet Holding  vs.  US629377CL46

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.

US629377CL46

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US629377CL46 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 629377CL4 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grocery Outlet and 629377CL4

The main advantage of trading using opposite Grocery Outlet and 629377CL4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet position performs unexpectedly, 629377CL4 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 629377CL4 will offset losses from the drop in 629377CL4's long position.

The idea behind Grocery Outlet Holding and US629377CL46 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.