Correlation Between Grocery Outlet and Gap,
Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and Gap, 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 Gap, 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 The Gap,, you can compare the effects of market volatilities on Grocery Outlet and Gap, 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 Gap,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and Gap,.
Diversification Opportunities for Grocery Outlet and Gap,
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grocery and Gap, is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and The Gap, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap, 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 Gap,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap, has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Gap, go up and down completely randomly.
Pair Corralation between Grocery Outlet and Gap,
Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the Gap,. But the stock apears to be less risky and, when comparing its historical volatility, Grocery Outlet Holding is 1.45 times less risky than Gap,. The stock trades about -0.02 of its potential returns per unit of risk. The The Gap, is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,389 in The Gap, on August 26, 2024 and sell it today you would earn a total of 1,098 from holding The Gap, or generate 79.05% 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. The Gap,
Performance |
| Timeline |
| Grocery Outlet Holding |
| Gap, |
Grocery Outlet and Gap, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grocery Outlet and Gap,
The main advantage of trading using opposite Grocery Outlet and Gap, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet position performs unexpectedly, Gap, 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 Gap, will offset losses from the drop in Gap,'s long position.| Grocery Outlet vs. Hf Foods Group | Grocery Outlet vs. Innovative Food Hldg | Grocery Outlet vs. Calavo Growers | Grocery Outlet vs. The Chefs Warehouse |
| Gap, vs. Tyson Foods | Gap, vs. Natural Alternatives International | Gap, vs. FitLife Brands, Common | Gap, vs. National CineMedia |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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