Correlation Between Ocado Group and Natural Grocers

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

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

Diversification Opportunities for Ocado Group and Natural Grocers

0.12

Correlation Coefficient

Ocado Group  Natural Grocers

Average diversification

The 3 months correlation between Ocado and Natural is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ocado Group plc 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 Ocado Group 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 Ocado Group plc 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 Ocado Group i.e., Ocado Group and Natural Grocers go up and down completely randomly.

Pair Corralation between Ocado Group and Natural Grocers

Assuming the 90 days horizon Ocado Group plc is expected to generate 1.07 times more return on investment than Natural Grocers. However, Ocado Group is 1.07 times more volatile than Natural Grocers by. It trades about 0.05 of its potential returns per unit of risk. Natural Grocers by is currently generating about -0.05 per unit of risk. If you would invest  799.00  in Ocado Group plc on November 29, 2024 and sell it today you would earn a total of  52.00  from holding Ocado Group plc or generate 6.51% return on investment over 90 days.

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

Ocado Group plc  vs.  Natural Grocers by

Ocado Group plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ocado Group plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Ocado Group may actually be approaching a critical reversion point that can send shares even higher in March 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 latest conflicting performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Ocado Group and Natural Grocers

The main advantage of trading using opposite Ocado Group and Natural Grocers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ocado Group 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 Ocado Group plc 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.