Correlation Between Ocado Group and Natural Grocers
Can any of the company-specific risk be diversified away by investing in both Ocado Group and Natural Grocers 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 Ocado Group and Natural Grocers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ocado Group plc and Natural Grocers by, you can compare the effects of market volatilities on Ocado Group and Natural Grocers 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 Ocado Group with a short position of Natural Grocers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ocado Group and Natural Grocers.
Diversification Opportunities for Ocado Group and Natural Grocers
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ocado and Natural is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ocado Group plc and Natural Grocers by in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Grocers by and Ocado Group 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 Ocado Group plc are associated (or correlated) with Natural Grocers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Grocers by has no effect on the direction of Ocado Group i.e., Ocado Group and Natural Grocers go up and down completely randomly.
Pair Corralation between Ocado Group and Natural Grocers
Assuming the 90 days horizon Ocado Group is expected to generate 12.03 times less return on investment than Natural Grocers. But when comparing it to its historical volatility, Ocado Group plc is 1.07 times less risky than Natural Grocers. It trades about 0.03 of its potential returns per unit of risk. Natural Grocers by is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 4,033 in Natural Grocers by on November 18, 2024 and sell it today you would earn a total of 861.00 from holding Natural Grocers by or generate 21.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ocado Group plc vs. Natural Grocers by
Performance |
| Timeline |
| Ocado Group plc |
| Natural Grocers by |
Ocado Group and Natural Grocers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ocado Group and Natural Grocers
The main advantage of trading using opposite Ocado Group and Natural Grocers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ocado Group position performs unexpectedly, Natural Grocers 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 Natural Grocers will offset losses from the drop in Natural Grocers' long position.| Ocado Group vs. Natural Grocers by | Ocado Group vs. Grocery Outlet Holding | Ocado Group vs. Village Super Market | Ocado Group vs. Ingles Markets Incorporated |
| Natural Grocers vs. Weis Markets | Natural Grocers vs. Ingles Markets Incorporated | Natural Grocers vs. Grocery Outlet Holding | Natural Grocers vs. Village Super Market |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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