Correlation Between Natural Grocers and Koninklijke Ahold

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

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

Diversification Opportunities for Natural Grocers and Koninklijke Ahold

-0.15

Correlation Coefficient

Natural Grocers  Koninklijke Ahold

Good diversification

The 3 months correlation between Natural and Koninklijke is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Natural Grocers by and Koninklijke Ahold Delhaize in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Ahold and Natural Grocers 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 Natural Grocers by are associated (or correlated) with Koninklijke Ahold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Ahold has no effect on the direction of Natural Grocers i.e., Natural Grocers and Koninklijke Ahold go up and down completely randomly.

Pair Corralation between Natural Grocers and Koninklijke Ahold

Given the investment horizon of 90 days Natural Grocers by is expected to under-perform the Koninklijke Ahold. In addition to that, Natural Grocers is 1.49 times more volatile than Koninklijke Ahold Delhaize. It trades about 0.0 of its total potential returns per unit of risk. Koninklijke Ahold Delhaize is currently generating about 0.11 per unit of volatility. If you would invest  3,269  in Koninklijke Ahold Delhaize on December 30, 2024 and sell it today you would earn a total of  469.00  from holding Koninklijke Ahold Delhaize or generate 14.35% return on investment over 90 days.

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

Natural Grocers by  vs.  Koninklijke Ahold Delhaize

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.

Koninklijke Ahold

Risk-Adjusted Performance

OK

Over the last 90 days Koninklijke Ahold Delhaize has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak fundamental indicators, Koninklijke Ahold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Natural Grocers and Koninklijke Ahold

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

The idea behind Natural Grocers by and Koninklijke Ahold Delhaize 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.