Correlation Between Grocery Outlet and Virco Manufacturing
Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and Virco Manufacturing 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 Virco Manufacturing 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 Virco Manufacturing, you can compare the effects of market volatilities on Grocery Outlet and Virco Manufacturing 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 Virco Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and Virco Manufacturing.
Diversification Opportunities for Grocery Outlet and Virco Manufacturing
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grocery and Virco is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Virco Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virco Manufacturing 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 Virco Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virco Manufacturing has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Virco Manufacturing go up and down completely randomly.
Pair Corralation between Grocery Outlet and Virco Manufacturing
Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the Virco Manufacturing. But the stock apears to be less risky and, when comparing its historical volatility, Grocery Outlet Holding is 1.74 times less risky than Virco Manufacturing. The stock trades about -0.02 of its potential returns per unit of risk. The Virco Manufacturing is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 381.00 in Virco Manufacturing on August 31, 2024 and sell it today you would earn a total of 1,261 from holding Virco Manufacturing or generate 330.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grocery Outlet Holding vs. Virco Manufacturing
Performance |
| Timeline |
| Grocery Outlet Holding |
| Virco Manufacturing |
Grocery Outlet and Virco Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grocery Outlet and Virco Manufacturing
The main advantage of trading using opposite Grocery Outlet and Virco Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet position performs unexpectedly, Virco Manufacturing 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 Virco Manufacturing will offset losses from the drop in Virco Manufacturing'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 |
| Virco Manufacturing vs. Bassett Furniture Industries | Virco Manufacturing vs. Hooker Furniture | Virco Manufacturing vs. Natuzzi SpA | Virco Manufacturing vs. Flexsteel Industries |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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