Correlation Between Grocery Outlet and Ocado Group
Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and Ocado Group 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 Ocado Group 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 Ocado Group PLC, you can compare the effects of market volatilities on Grocery Outlet and Ocado Group 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 Ocado Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and Ocado Group.
Diversification Opportunities for Grocery Outlet and Ocado Group
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Grocery and Ocado is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Ocado Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocado Group PLC 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 Ocado Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocado Group PLC has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Ocado Group go up and down completely randomly.
Pair Corralation between Grocery Outlet and Ocado Group
Allowing for the 90-day total investment horizon Grocery Outlet is expected to generate 2.24 times less return on investment than Ocado Group. But when comparing it to its historical volatility, Grocery Outlet Holding is 1.51 times less risky than Ocado Group. It trades about 0.12 of its potential returns per unit of risk. Ocado Group PLC is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 355.00 in Ocado Group PLC on November 9, 2024 and sell it today you would earn a total of 50.00 from holding Ocado Group PLC or generate 14.08% 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. Ocado Group PLC
Performance |
| Timeline |
| Grocery Outlet Holding |
| Ocado Group PLC |
Grocery Outlet and Ocado Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grocery Outlet and Ocado Group
The main advantage of trading using opposite Grocery Outlet and Ocado Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet position performs unexpectedly, Ocado Group 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 Ocado Group will offset losses from the drop in Ocado Group'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 |
| Ocado Group vs. Tesco PLC | Ocado Group vs. Dairy Farm International | Ocado Group vs. Woolworths Group Limited | Ocado Group vs. Kesko Oyj ADR |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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