Correlation Between Natural Grocers and Metro

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

Diversification Opportunities for Natural Grocers and Metro

0.58

Correlation Coefficient

Natural Grocers  Metro

Very weak diversification

The 3 months correlation between Natural and Metro is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Natural Grocers by and Metro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Inc 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 Metro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Inc has no effect on the direction of Natural Grocers i.e., Natural Grocers and Metro go up and down completely randomly.

Pair Corralation between Natural Grocers and Metro

Given the investment horizon of 90 days Natural Grocers by is expected to under-perform the Metro. In addition to that, Natural Grocers is 2.61 times more volatile than Metro Inc. It trades about 0.0 of its total potential returns per unit of risk. Metro Inc is currently generating about 0.02 per unit of volatility. If you would invest  6,557  in Metro Inc on December 1, 2024 and sell it today you would earn a total of  70.00  from holding Metro Inc or generate 1.07% return on investment over 90 days.

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

Natural Grocers by  vs.  Metro Inc

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.

Metro Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Metro Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Metro is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Natural Grocers and Metro

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

The idea behind Natural Grocers by and Metro Inc 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.