Correlation Between Primerica and Grocery Outlet

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

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

Diversification Opportunities for Primerica and Grocery Outlet

0.78

Correlation Coefficient

Primerica  Grocery Outlet

Poor diversification

The 3 months correlation between Primerica and Grocery is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Primerica 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 Primerica 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 Primerica 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 Primerica i.e., Primerica and Grocery Outlet go up and down completely randomly.

Pair Corralation between Primerica and Grocery Outlet

Considering the 90-day investment horizon Primerica is expected to generate 0.37 times more return on investment than Grocery Outlet. However, Primerica is 2.74 times less risky than Grocery Outlet. It trades about -0.37 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about -0.26 per unit of risk. If you would invest  29,788  in Primerica on October 5, 2024 and sell it today you would lose (2,612) from holding Primerica or give up 8.77% of portfolio value over 90 days.

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

Primerica  vs.  Grocery Outlet Holding

Primerica

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Primerica are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Primerica 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 Primerica and Grocery Outlet

The main advantage of trading using opposite Primerica and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primerica 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 Primerica 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.