Correlation Between Grocery Outlet and TerraForm
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By analyzing existing cross correlation between Grocery Outlet Holding and TerraForm Power 5, you can compare the effects of market volatilities on Grocery Outlet and TerraForm 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 TerraForm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and TerraForm.
Diversification Opportunities for Grocery Outlet and TerraForm
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Grocery and TerraForm is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and TerraForm Power 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TerraForm Power 5 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 TerraForm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TerraForm Power 5 has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and TerraForm go up and down completely randomly.
Pair Corralation between Grocery Outlet and TerraForm
Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to generate 6.85 times more return on investment than TerraForm. However, Grocery Outlet is 6.85 times more volatile than TerraForm Power 5. It trades about 0.01 of its potential returns per unit of risk. TerraForm Power 5 is currently generating about -0.02 per unit of risk. If you would invest 2,199 in Grocery Outlet Holding on August 29, 2024 and sell it today you would lose (83.00) from holding Grocery Outlet Holding or give up 3.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.2% |
| Values | Daily Returns |
Grocery Outlet Holding vs. TerraForm Power 5
Performance |
| Timeline |
| Grocery Outlet Holding |
| TerraForm Power 5 |
Grocery Outlet and TerraForm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grocery Outlet and TerraForm
The main advantage of trading using opposite Grocery Outlet and TerraForm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet position performs unexpectedly, TerraForm 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 TerraForm will offset losses from the drop in TerraForm's long position.| Grocery Outlet vs. Innovative Food Hldg | Grocery Outlet vs. Calavo Growers | Grocery Outlet vs. The Chefs Warehouse | Grocery Outlet vs. AMCON Distributing |
| TerraForm vs. Definitive Healthcare Corp | TerraForm vs. Grocery Outlet Holding | TerraForm vs. CDW Corp | TerraForm vs. BBB Foods |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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