Correlation Between Albertsons Companies and Red Cat
Can any of the company-specific risk be diversified away by investing in both Albertsons Companies and Red Cat 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 Red Cat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Albertsons Companies and Red Cat Holdings, you can compare the effects of market volatilities on Albertsons Companies and Red Cat 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 Red Cat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albertsons Companies and Red Cat.
Diversification Opportunities for Albertsons Companies and Red Cat
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Albertsons and Red is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Albertsons Companies and Red Cat Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Cat Holdings 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 Red Cat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Cat Holdings has no effect on the direction of Albertsons Companies i.e., Albertsons Companies and Red Cat go up and down completely randomly.
Pair Corralation between Albertsons Companies and Red Cat
Considering the 90-day investment horizon Albertsons Companies is expected to under-perform the Red Cat. But the stock apears to be less risky and, when comparing its historical volatility, Albertsons Companies is 7.0 times less risky than Red Cat. The stock trades about 0.0 of its potential returns per unit of risk. The Red Cat Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 70.00 in Red Cat Holdings on November 5, 2024 and sell it today you would earn a total of 809.00 from holding Red Cat Holdings or generate 1155.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Albertsons Companies vs. Red Cat Holdings
Performance |
| Timeline |
| Albertsons Companies |
| Red Cat Holdings |
Albertsons Companies and Red Cat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Albertsons Companies and Red Cat
The main advantage of trading using opposite Albertsons Companies and Red Cat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albertsons Companies position performs unexpectedly, Red Cat 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 Red Cat will offset losses from the drop in Red Cat'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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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