Correlation Between Healthier Choices and Albertsons Companies

Can any of the company-specific risk be diversified away by investing in both Healthier Choices and Albertsons Companies 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 Healthier Choices and Albertsons Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Healthier Choices Management and Albertsons Companies, you can compare the effects of market volatilities on Healthier Choices and Albertsons Companies 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 Healthier Choices with a short position of Albertsons Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Healthier Choices and Albertsons Companies.

Diversification Opportunities for Healthier Choices and Albertsons Companies

0.43

Correlation Coefficient

Healthier Choices  Albertsons Companies

Very weak diversification

The 3 months correlation between Healthier and Albertsons is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Healthier Choices Management and Albertsons Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albertsons Companies and Healthier Choices 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 Healthier Choices Management are associated (or correlated) with Albertsons Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albertsons Companies has no effect on the direction of Healthier Choices i.e., Healthier Choices and Albertsons Companies go up and down completely randomly.

Pair Corralation between Healthier Choices and Albertsons Companies

Given the investment horizon of 90 days Healthier Choices Management is expected to generate 208.61 times more return on investment than Albertsons Companies. However, Healthier Choices is 208.61 times more volatile than Albertsons Companies. It trades about 0.34 of its potential returns per unit of risk. Albertsons Companies is currently generating about 0.11 per unit of risk. If you would invest  0.00  in Healthier Choices Management on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Healthier Choices Management or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Healthier Choices Management  vs.  Albertsons Companies

Healthier Choices

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Healthier Choices Management are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, Healthier Choices exhibited solid returns over the last few months and may actually be approaching a breakup point.

Albertsons Companies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Albertsons Companies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating fundamental indicators, Albertsons Companies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Healthier Choices and Albertsons Companies

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

The idea behind Healthier Choices Management and Albertsons Companies 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.