Correlation Between Natural Grocers and Dada Nexus
Can any of the company-specific risk be diversified away by investing in both Natural Grocers and Dada Nexus 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 Dada Nexus 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 Dada Nexus, you can compare the effects of market volatilities on Natural Grocers and Dada Nexus 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 Dada Nexus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Grocers and Dada Nexus.
Diversification Opportunities for Natural Grocers and Dada Nexus
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Natural and Dada is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Natural Grocers by and Dada Nexus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dada Nexus 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 Dada Nexus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dada Nexus has no effect on the direction of Natural Grocers i.e., Natural Grocers and Dada Nexus go up and down completely randomly.
Pair Corralation between Natural Grocers and Dada Nexus
Given the investment horizon of 90 days Natural Grocers by is expected to generate 0.55 times more return on investment than Dada Nexus. However, Natural Grocers by is 1.83 times less risky than Dada Nexus. It trades about 0.11 of its potential returns per unit of risk. Dada Nexus is currently generating about -0.03 per unit of risk. If you would invest 984.00 in Natural Grocers by on November 26, 2024 and sell it today you would earn a total of 3,165 from holding Natural Grocers by or generate 321.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Natural Grocers by vs. Dada Nexus
Performance |
Timeline |
Natural Grocers by |
Dada Nexus |
Natural Grocers and Dada Nexus Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Natural Grocers and Dada Nexus
The main advantage of trading using opposite Natural Grocers and Dada Nexus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Grocers position performs unexpectedly, Dada Nexus 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 Dada Nexus will offset losses from the drop in Dada Nexus' long position.Natural Grocers vs. Weis Markets | ||
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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