Correlation Between Weis Markets and Grocery Outlet

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

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

Diversification Opportunities for Weis Markets and Grocery Outlet

-0.72

Correlation Coefficient

Weis Markets  Grocery Outlet

Pay attention - limited upside

The 3 months correlation between Weis and Grocery is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Weis Markets 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 Weis Markets 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 Weis Markets 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 Weis Markets i.e., Weis Markets and Grocery Outlet go up and down completely randomly.

Pair Corralation between Weis Markets and Grocery Outlet

Considering the 90-day investment horizon Weis Markets is expected to generate 0.34 times more return on investment than Grocery Outlet. However, Weis Markets is 2.94 times less risky than Grocery Outlet. It trades about 0.14 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about -0.03 per unit of risk. If you would invest  6,778  in Weis Markets on December 27, 2024 and sell it today you would earn a total of  998.00  from holding Weis Markets or generate 14.72% return on investment over 90 days.

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

Weis Markets  vs.  Grocery Outlet Holding

Weis Markets

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Weis Markets are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady primary indicators, Weis Markets disclosed solid returns over the last few months and may actually be approaching a breakup point.

Grocery Outlet Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grocery Outlet Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Weis Markets and Grocery Outlet

The main advantage of trading using opposite Weis Markets and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weis Markets 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 Weis Markets 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.