Correlation Between Grocery Outlet and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Grocery Outlet and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and Dow Jones.
Diversification Opportunities for Grocery Outlet and Dow Jones
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grocery and Dow is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Dow Jones go up and down completely randomly.
Pair Corralation between Grocery Outlet and Dow Jones
Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to generate 5.18 times more return on investment than Dow Jones. However, Grocery Outlet is 5.18 times more volatile than Dow Jones Industrial. It trades about 0.09 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.2 per unit of risk. If you would invest 1,595 in Grocery Outlet Holding on November 18, 2024 and sell it today you would earn a total of 73.00 from holding Grocery Outlet Holding or generate 4.58% 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. Dow Jones Industrial
Performance |
| Timeline |
Grocery Outlet and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Grocery Outlet Holding
Pair trading matchups for Grocery Outlet
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Grocery Outlet and Dow Jones
The main advantage of trading using opposite Grocery Outlet and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' 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 |
| Dow Jones vs. Palomar Holdings | Dow Jones vs. Mesa Air Group | Dow Jones vs. LATAM Airlines Group | Dow Jones vs. Unum Group |
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.
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