Correlation Between Albertsons Companies and Metro
Can any of the company-specific risk be diversified away by investing in both Albertsons Companies and Metro 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 Albertsons Companies and Metro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Albertsons Companies and Metro Inc, you can compare the effects of market volatilities on Albertsons Companies and Metro 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 Albertsons Companies with a short position of Metro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albertsons Companies and Metro.
Diversification Opportunities for Albertsons Companies and Metro
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Albertsons and Metro is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Albertsons Companies and Metro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Inc and Albertsons Companies 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 Albertsons Companies are associated (or correlated) with Metro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Inc has no effect on the direction of Albertsons Companies i.e., Albertsons Companies and Metro go up and down completely randomly.
Pair Corralation between Albertsons Companies and Metro
Considering the 90-day investment horizon Albertsons Companies is expected to generate 1.83 times less return on investment than Metro. But when comparing it to its historical volatility, Albertsons Companies is 1.22 times less risky than Metro. It trades about 0.12 of its potential returns per unit of risk. Metro Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 6,357 in Metro Inc on November 28, 2024 and sell it today you would earn a total of 378.00 from holding Metro Inc or generate 5.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Albertsons Companies vs. Metro Inc
Performance |
| Timeline |
| Albertsons Companies |
| Metro Inc |
Albertsons Companies and Metro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Albertsons Companies and Metro
The main advantage of trading using opposite Albertsons Companies and Metro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albertsons Companies position performs unexpectedly, Metro 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 Metro will offset losses from the drop in Metro's long position.| Albertsons Companies vs. Sprouts Farmers Market | Albertsons Companies vs. Krispy Kreme | Albertsons Companies vs. Grocery Outlet Holding | Albertsons Companies vs. Weis Markets |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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