Correlation Between Natural Grocers and Coles
Can any of the company-specific risk be diversified away by investing in both Natural Grocers and Coles 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 Natural Grocers and Coles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Grocers by and Coles Group, you can compare the effects of market volatilities on Natural Grocers and Coles 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 Natural Grocers with a short position of Coles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Grocers and Coles.
Diversification Opportunities for Natural Grocers and Coles
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Natural and Coles is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Natural Grocers by and Coles Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coles Group and Natural Grocers 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 Natural Grocers by are associated (or correlated) with Coles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coles Group has no effect on the direction of Natural Grocers i.e., Natural Grocers and Coles go up and down completely randomly.
Pair Corralation between Natural Grocers and Coles
Given the investment horizon of 90 days Natural Grocers by is expected to generate 0.42 times more return on investment than Coles. However, Natural Grocers by is 2.41 times less risky than Coles. It trades about 0.12 of its potential returns per unit of risk. Coles Group is currently generating about 0.03 per unit of risk. If you would invest 878.00 in Natural Grocers by on August 24, 2024 and sell it today you would earn a total of 3,682 from holding Natural Grocers by or generate 419.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 67.74% |
| Values | Daily Returns |
Natural Grocers by vs. Coles Group
Performance |
| Timeline |
| Natural Grocers by |
| Coles Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Natural Grocers and Coles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Grocers and Coles
The main advantage of trading using opposite Natural Grocers and Coles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Grocers position performs unexpectedly, Coles 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 Coles will offset losses from the drop in Coles' long position.| Natural Grocers vs. Weis Markets | Natural Grocers vs. Ingles Markets Incorporated | Natural Grocers vs. Sendas Distribuidora SA | Natural Grocers vs. Grocery Outlet Holding |
| Coles vs. Seven i Holdings | Coles vs. Grocery Outlet Holding | Coles vs. Krispy Kreme | Coles vs. Koninklijke Ahold Delhaize |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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