Correlation Between Grocery Outlet and HE Equipment
Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and HE Equipment 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 HE Equipment 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 HE Equipment Services, you can compare the effects of market volatilities on Grocery Outlet and HE Equipment 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 HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and HE Equipment.
Diversification Opportunities for Grocery Outlet and HE Equipment
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Grocery and HEES is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and HE Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HE Equipment Services 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 HE Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HE Equipment Services has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and HE Equipment go up and down completely randomly.
Pair Corralation between Grocery Outlet and HE Equipment
Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to generate 1.51 times more return on investment than HE Equipment. However, Grocery Outlet is 1.51 times more volatile than HE Equipment Services. It trades about 0.16 of its potential returns per unit of risk. HE Equipment Services is currently generating about 0.09 per unit of risk. If you would invest 1,677 in Grocery Outlet Holding on August 26, 2024 and sell it today you would earn a total of 277.00 from holding Grocery Outlet Holding or generate 16.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grocery Outlet Holding vs. HE Equipment Services
Performance |
| Timeline |
| Grocery Outlet Holding |
| HE Equipment Services |
Grocery Outlet and HE Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grocery Outlet and HE Equipment
The main advantage of trading using opposite Grocery Outlet and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet position performs unexpectedly, HE Equipment 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 HE Equipment will offset losses from the drop in HE Equipment'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 |
| HE Equipment vs. PROG Holdings | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Mega Matrix Corp | HE Equipment vs. FTAI Aviation Ltd |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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