Correlation Between Coles and Grocery Outlet
Can any of the company-specific risk be diversified away by investing in both Coles 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 Coles and Grocery Outlet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coles Group and Grocery Outlet Holding, you can compare the effects of market volatilities on Coles 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 Coles with a short position of Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coles and Grocery Outlet.
Diversification Opportunities for Coles and Grocery Outlet
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coles and Grocery is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Coles Group 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 Coles 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 Coles Group 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 Coles i.e., Coles and Grocery Outlet go up and down completely randomly.
Pair Corralation between Coles and Grocery Outlet
Assuming the 90 days horizon Coles Group is expected to generate 3.07 times more return on investment than Grocery Outlet. However, Coles is 3.07 times more volatile than Grocery Outlet Holding. It trades about 0.03 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about -0.02 per unit of risk. If you would invest 1,020 in Coles Group on August 24, 2024 and sell it today you would lose (128.00) from holding Coles Group or give up 12.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 67.74% |
| Values | Daily Returns |
Coles Group vs. Grocery Outlet Holding
Performance |
| Timeline |
| Coles Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Grocery Outlet Holding |
Coles and Grocery Outlet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coles and Grocery Outlet
The main advantage of trading using opposite Coles and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coles 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.| Coles vs. Seven i Holdings | Coles vs. Grocery Outlet Holding | Coles vs. Krispy Kreme | Coles vs. Koninklijke Ahold Delhaize |
| Grocery Outlet vs. Natural Grocers by | Grocery Outlet vs. Ingles Markets Incorporated | Grocery Outlet vs. Ocado Group plc | Grocery Outlet vs. Weis Markets |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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