Correlation Between Grocery Outlet and Pool
Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and Pool 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 Pool 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 Pool Corporation, you can compare the effects of market volatilities on Grocery Outlet and Pool 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 Pool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and Pool.
Diversification Opportunities for Grocery Outlet and Pool
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grocery and Pool is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Pool Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pool 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 Pool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pool has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Pool go up and down completely randomly.
Pair Corralation between Grocery Outlet and Pool
Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the Pool. In addition to that, Grocery Outlet is 1.64 times more volatile than Pool Corporation. It trades about -0.04 of its total potential returns per unit of risk. Pool Corporation is currently generating about -0.01 per unit of volatility. If you would invest 37,602 in Pool Corporation on November 3, 2024 and sell it today you would lose (3,177) from holding Pool Corporation or give up 8.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grocery Outlet Holding vs. Pool Corp.
Performance |
| Timeline |
| Grocery Outlet Holding |
| Pool |
Grocery Outlet and Pool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grocery Outlet and Pool
The main advantage of trading using opposite Grocery Outlet and Pool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet position performs unexpectedly, Pool 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 Pool will offset losses from the drop in Pool'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 |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |