Correlation Between Grocery Outlet and Fresh Grapes
Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and Fresh Grapes 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 Fresh Grapes 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 Fresh Grapes LLC, you can compare the effects of market volatilities on Grocery Outlet and Fresh Grapes 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 Fresh Grapes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and Fresh Grapes.
Diversification Opportunities for Grocery Outlet and Fresh Grapes
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Grocery and Fresh is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Fresh Grapes LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresh Grapes LLC 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 Fresh Grapes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresh Grapes LLC has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Fresh Grapes go up and down completely randomly.
Pair Corralation between Grocery Outlet and Fresh Grapes
Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the Fresh Grapes. But the stock apears to be less risky and, when comparing its historical volatility, Grocery Outlet Holding is 2.82 times less risky than Fresh Grapes. The stock trades about -0.03 of its potential returns per unit of risk. The Fresh Grapes LLC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 58.00 in Fresh Grapes LLC on August 24, 2024 and sell it today you would earn a total of 6.00 from holding Fresh Grapes LLC or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grocery Outlet Holding vs. Fresh Grapes LLC
Performance |
| Timeline |
| Grocery Outlet Holding |
| Fresh Grapes LLC |
Grocery Outlet and Fresh Grapes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grocery Outlet and Fresh Grapes
The main advantage of trading using opposite Grocery Outlet and Fresh Grapes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet position performs unexpectedly, Fresh Grapes 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 Fresh Grapes will offset losses from the drop in Fresh Grapes' long position.The idea behind Grocery Outlet Holding and Fresh Grapes LLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Fresh Grapes vs. Willamette Valley Vineyards | Fresh Grapes vs. Splash Beverage Group | Fresh Grapes vs. Naked Wines plc | Fresh Grapes vs. Treasury Wine Estates |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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