Correlation Between Sprouts Farmers and Healthier Choices

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

By analyzing existing cross correlation between Sprouts Farmers Market and Healthier Choices Management, you can compare the effects of market volatilities on Sprouts Farmers and Healthier Choices 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 Sprouts Farmers with a short position of Healthier Choices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprouts Farmers and Healthier Choices.

Diversification Opportunities for Sprouts Farmers and Healthier Choices

-0.03

Correlation Coefficient

Sprouts Farmers  Healthier Choices

Good diversification

The 3 months correlation between Sprouts and Healthier is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Sprouts Farmers Market and Healthier Choices Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthier Choices and Sprouts Farmers 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 Sprouts Farmers Market are associated (or correlated) with Healthier Choices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthier Choices has no effect on the direction of Sprouts Farmers i.e., Sprouts Farmers and Healthier Choices go up and down completely randomly.

Pair Corralation between Sprouts Farmers and Healthier Choices

Considering the 90-day investment horizon Sprouts Farmers is expected to generate 409.27 times less return on investment than Healthier Choices. But when comparing it to its historical volatility, Sprouts Farmers Market is 114.22 times less risky than Healthier Choices. It trades about 0.09 of its potential returns per unit of risk. Healthier Choices Management is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Healthier Choices Management on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Healthier Choices Management or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Sprouts Farmers Market  vs.  Healthier Choices Management

Sprouts Farmers Market

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sprouts Farmers Market are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, Sprouts Farmers displayed solid returns over the last few months and may actually be approaching a breakup point.

Healthier Choices

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Healthier Choices Management are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, Healthier Choices exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sprouts Farmers and Healthier Choices

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

The idea behind Sprouts Farmers Market and Healthier Choices Management 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.

Check out your portfolio center.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..