Correlation Between Natural Grocers and Dingdong ADR

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

Diversification Opportunities for Natural Grocers and Dingdong ADR

0.32

Correlation Coefficient

Natural Grocers  Dingdong ADR

Weak diversification

The 3 months correlation between Natural and Dingdong is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Natural Grocers by and Dingdong ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dingdong ADR 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 Dingdong ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dingdong ADR has no effect on the direction of Natural Grocers i.e., Natural Grocers and Dingdong ADR go up and down completely randomly.

Pair Corralation between Natural Grocers and Dingdong ADR

Given the investment horizon of 90 days Natural Grocers by is expected to generate 0.78 times more return on investment than Dingdong ADR. However, Natural Grocers by is 1.29 times less risky than Dingdong ADR. It trades about 0.0 of its potential returns per unit of risk. Dingdong ADR is currently generating about -0.08 per unit of risk. If you would invest  3,958  in Natural Grocers by on December 29, 2024 and sell it today you would lose (146.00) from holding Natural Grocers by or give up 3.69% of portfolio value over 90 days.

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

Natural Grocers by  vs.  Dingdong ADR

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.

Dingdong ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dingdong ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Natural Grocers and Dingdong ADR

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

The idea behind Natural Grocers by and Dingdong ADR 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.