Correlation Between Marfrig Global and Grocery Outlet
Can any of the company-specific risk be diversified away by investing in both Marfrig Global and Grocery Outlet 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 Marfrig Global and Grocery Outlet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marfrig Global Foods and Grocery Outlet Holding, you can compare the effects of market volatilities on Marfrig Global and Grocery Outlet 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 Marfrig Global with a short position of Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marfrig Global and Grocery Outlet.
Diversification Opportunities for Marfrig Global and Grocery Outlet
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Marfrig and Grocery is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding and Marfrig Global 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 Marfrig Global Foods are associated (or correlated) with Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of Marfrig Global i.e., Marfrig Global and Grocery Outlet go up and down completely randomly.
Pair Corralation between Marfrig Global and Grocery Outlet
Assuming the 90 days horizon Marfrig Global is expected to generate 2.35 times less return on investment than Grocery Outlet. But when comparing it to its historical volatility, Marfrig Global Foods is 1.11 times less risky than Grocery Outlet. It trades about 0.26 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about 0.54 of returns per unit of risk over similar time horizon. If you would invest 1,390 in Grocery Outlet Holding on August 31, 2024 and sell it today you would earn a total of 735.00 from holding Grocery Outlet Holding or generate 52.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marfrig Global Foods vs. Grocery Outlet Holding
Performance |
| Timeline |
| Marfrig Global Foods |
| Grocery Outlet Holding |
Marfrig Global and Grocery Outlet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marfrig Global and Grocery Outlet
The main advantage of trading using opposite Marfrig Global and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marfrig Global position performs unexpectedly, Grocery Outlet 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 Grocery Outlet will offset losses from the drop in Grocery Outlet's long position.| Marfrig Global vs. The A2 Milk | Marfrig Global vs. Altavoz Entertainment | Marfrig Global vs. Artisan Consumer Goods | Marfrig Global vs. General Mills |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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