Correlation Between Metro and Natural Grocers

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

By analyzing existing cross correlation between Metro Inc and Natural Grocers by, you can compare the effects of market volatilities on Metro and Natural Grocers 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 Metro with a short position of Natural Grocers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro and Natural Grocers.

Diversification Opportunities for Metro and Natural Grocers

0.0

Correlation Coefficient

Metro  Natural Grocers

Pay attention - limited upside

The 3 months correlation between Metro and Natural is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Metro Inc and Natural Grocers by in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Grocers by and Metro 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 Metro Inc are associated (or correlated) with Natural Grocers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Grocers by has no effect on the direction of Metro i.e., Metro and Natural Grocers go up and down completely randomly.

Pair Corralation between Metro and Natural Grocers

Assuming the 90 days horizon Metro Inc is expected to generate 0.38 times more return on investment than Natural Grocers. However, Metro Inc is 2.64 times less risky than Natural Grocers. It trades about 0.12 of its potential returns per unit of risk. Natural Grocers by is currently generating about 0.0 per unit of risk. If you would invest  6,284  in Metro Inc on December 29, 2024 and sell it today you would earn a total of  561.00  from holding Metro Inc or generate 8.93% return on investment over 90 days.

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

Metro Inc  vs.  Natural Grocers by

Metro Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metro Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Metro may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Natural Grocers by

Risk-Adjusted Performance

Very Weak

Over the last 90 days Natural Grocers by has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Natural Grocers is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Metro and Natural Grocers

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

The idea behind Metro Inc and Natural Grocers by 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.