Correlation Between Grocery Outlet and Sea
Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and Sea 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 Sea 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 Sea, you can compare the effects of market volatilities on Grocery Outlet and Sea 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 Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and Sea.
Diversification Opportunities for Grocery Outlet and Sea
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Grocery and Sea is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea 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 Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Sea go up and down completely randomly.
Pair Corralation between Grocery Outlet and Sea
Allowing for the 90-day total investment horizon Grocery Outlet is expected to generate 19.2 times less return on investment than Sea. In addition to that, Grocery Outlet is 1.36 times more volatile than Sea. It trades about 0.01 of its total potential returns per unit of risk. Sea is currently generating about 0.18 per unit of volatility. If you would invest 6,935 in Sea on August 30, 2024 and sell it today you would earn a total of 4,636 from holding Sea or generate 66.85% 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. Sea
Performance |
| Timeline |
| Grocery Outlet Holding |
| Sea |
Grocery Outlet and Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grocery Outlet and Sea
The main advantage of trading using opposite Grocery Outlet and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet position performs unexpectedly, Sea 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 Sea will offset losses from the drop in Sea's long position.| Grocery Outlet vs. Weis Markets | Grocery Outlet vs. Ingles Markets Incorporated | Grocery Outlet vs. Sendas Distribuidora SA | Grocery Outlet vs. Village Super Market |
| Sea vs. Atari SA | Sea vs. Victory Square Technologies | Sea vs. Motorsport Gaming Us | Sea vs. Alpha Esports Tech |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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