Correlation Between Grocery Outlet and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and Algoma Steel 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 Grocery Outlet and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grocery Outlet Holding and Algoma Steel Group, you can compare the effects of market volatilities on Grocery Outlet and Algoma Steel 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 Grocery Outlet with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and Algoma Steel.
Diversification Opportunities for Grocery Outlet and Algoma Steel
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grocery and Algoma is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Algoma Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Steel Group and Grocery Outlet 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 Grocery Outlet Holding are associated (or correlated) with Algoma Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Steel Group has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Algoma Steel go up and down completely randomly.
Pair Corralation between Grocery Outlet and Algoma Steel
Allowing for the 90-day total investment horizon Grocery Outlet is expected to generate 23.96 times less return on investment than Algoma Steel. In addition to that, Grocery Outlet is 1.24 times more volatile than Algoma Steel Group. It trades about 0.0 of its total potential returns per unit of risk. Algoma Steel Group is currently generating about 0.12 per unit of volatility. If you would invest 751.00 in Algoma Steel Group on September 1, 2024 and sell it today you would earn a total of 326.00 from holding Algoma Steel Group or generate 43.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grocery Outlet Holding vs. Algoma Steel Group
Performance |
| Timeline |
| Grocery Outlet Holding |
| Algoma Steel Group |
Grocery Outlet and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grocery Outlet and Algoma Steel
The main advantage of trading using opposite Grocery Outlet and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet position performs unexpectedly, Algoma Steel 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 Algoma Steel will offset losses from the drop in Algoma Steel's long position.| Grocery Outlet vs. Natural Grocers by | Grocery Outlet vs. Village Super Market | Grocery Outlet vs. Ingles Markets Incorporated | Grocery Outlet vs. Ocado Group plc |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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