Correlation Between Grocery Outlet and Precision Drilling
Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and Precision Drilling 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 Precision Drilling 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 Precision Drilling, you can compare the effects of market volatilities on Grocery Outlet and Precision Drilling 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 Precision Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and Precision Drilling.
Diversification Opportunities for Grocery Outlet and Precision Drilling
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Grocery and Precision is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Precision Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precision Drilling 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 Precision Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precision Drilling has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Precision Drilling go up and down completely randomly.
Pair Corralation between Grocery Outlet and Precision Drilling
Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to generate 1.25 times more return on investment than Precision Drilling. However, Grocery Outlet is 1.25 times more volatile than Precision Drilling. It trades about 0.12 of its potential returns per unit of risk. Precision Drilling is currently generating about -0.28 per unit of risk. If you would invest 1,632 in Grocery Outlet Holding on November 9, 2024 and sell it today you would earn a total of 99.00 from holding Grocery Outlet Holding or generate 6.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grocery Outlet Holding vs. Precision Drilling
Performance |
| Timeline |
| Grocery Outlet Holding |
| Precision Drilling |
Grocery Outlet and Precision Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grocery Outlet and Precision Drilling
The main advantage of trading using opposite Grocery Outlet and Precision Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet position performs unexpectedly, Precision Drilling 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 Precision Drilling will offset losses from the drop in Precision Drilling'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 |
| Precision Drilling vs. Helmerich and Payne | Precision Drilling vs. Nabors Industries | Precision Drilling vs. Seadrill Limited | Precision Drilling vs. Patterson UTI Energy |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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