Correlation Between Grocery Outlet and Natural Grocers
Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and Natural Grocers 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 Natural Grocers 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 Natural Grocers by, you can compare the effects of market volatilities on Grocery Outlet and Natural Grocers 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 Natural Grocers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and Natural Grocers.
Diversification Opportunities for Grocery Outlet and Natural Grocers
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grocery and Natural is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Natural Grocers by in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Grocers by 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 Natural Grocers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Grocers by has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Natural Grocers go up and down completely randomly.
Pair Corralation between Grocery Outlet and Natural Grocers
Allowing for the 90-day total investment horizon Grocery Outlet is expected to generate 3.26 times less return on investment than Natural Grocers. But when comparing it to its historical volatility, Grocery Outlet Holding is 1.13 times less risky than Natural Grocers. It trades about 0.16 of its potential returns per unit of risk. Natural Grocers by is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 2,720 in Natural Grocers by on August 27, 2024 and sell it today you would earn a total of 1,978 from holding Natural Grocers by or generate 72.72% 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. Natural Grocers by
Performance |
| Timeline |
| Grocery Outlet Holding |
| Natural Grocers by |
Grocery Outlet and Natural Grocers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grocery Outlet and Natural Grocers
The main advantage of trading using opposite Grocery Outlet and Natural Grocers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet position performs unexpectedly, Natural Grocers 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 Natural Grocers will offset losses from the drop in Natural Grocers' long position.| Grocery Outlet vs. Innovative Food Hldg | Grocery Outlet vs. Calavo Growers | Grocery Outlet vs. The Chefs Warehouse | Grocery Outlet vs. AMCON Distributing |
| Natural Grocers vs. Innovative Food Hldg | Natural Grocers vs. Calavo Growers | Natural Grocers vs. The Chefs Warehouse | Natural Grocers vs. AMCON Distributing |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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