Correlation Between Old Republic and Grocery Outlet

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

By analyzing existing cross correlation between Old Republic International and Grocery Outlet Holding, you can compare the effects of market volatilities on Old Republic and Grocery Outlet 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 Old Republic with a short position of Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Grocery Outlet.

Diversification Opportunities for Old Republic and Grocery Outlet

0.82

Correlation Coefficient

Old Republic  Grocery Outlet

Very poor diversification

The 3 months correlation between Old and Grocery is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding and Old Republic 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 Old Republic International are associated (or correlated) with Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of Old Republic i.e., Old Republic and Grocery Outlet go up and down completely randomly.

Pair Corralation between Old Republic and Grocery Outlet

Considering the 90-day investment horizon Old Republic International is expected to generate 0.41 times more return on investment than Grocery Outlet. However, Old Republic International is 2.46 times less risky than Grocery Outlet. It trades about 0.08 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about -0.05 per unit of risk. If you would invest  2,853  in Old Republic International on October 5, 2024 and sell it today you would earn a total of  766.00  from holding Old Republic International or generate 26.85% return on investment over 90 days.

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

Old Republic International  vs.  Grocery Outlet Holding

Old Republic Interna

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Old Republic is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Grocery Outlet Holding

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grocery Outlet Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Grocery Outlet is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Old Republic and Grocery Outlet

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

The idea behind Old Republic International and Grocery Outlet Holding 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.