Correlation Between Ocado Group and Sprouts Farmers
Can any of the company-specific risk be diversified away by investing in both Ocado Group and Sprouts Farmers 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 Sprouts Farmers 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 Sprouts Farmers Market, you can compare the effects of market volatilities on Ocado Group and Sprouts Farmers 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 Sprouts Farmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ocado Group and Sprouts Farmers.
Diversification Opportunities for Ocado Group and Sprouts Farmers
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ocado and Sprouts is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ocado Group PLC and Sprouts Farmers Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprouts Farmers Market 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 Sprouts Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprouts Farmers Market has no effect on the direction of Ocado Group i.e., Ocado Group and Sprouts Farmers go up and down completely randomly.
Pair Corralation between Ocado Group and Sprouts Farmers
Assuming the 90 days horizon Ocado Group PLC is expected to under-perform the Sprouts Farmers. In addition to that, Ocado Group is 1.01 times more volatile than Sprouts Farmers Market. It trades about -0.41 of its total potential returns per unit of risk. Sprouts Farmers Market is currently generating about 0.46 per unit of volatility. If you would invest 12,018 in Sprouts Farmers Market on August 27, 2024 and sell it today you would earn a total of 2,780 from holding Sprouts Farmers Market or generate 23.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ocado Group PLC vs. Sprouts Farmers Market
Performance |
| Timeline |
| Ocado Group PLC |
| Sprouts Farmers Market |
Ocado Group and Sprouts Farmers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ocado Group and Sprouts Farmers
The main advantage of trading using opposite Ocado Group and Sprouts Farmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ocado Group position performs unexpectedly, Sprouts Farmers 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 Sprouts Farmers will offset losses from the drop in Sprouts Farmers' 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 |
| Sprouts Farmers vs. Innovative Food Hldg | Sprouts Farmers vs. Calavo Growers | Sprouts Farmers vs. The Chefs Warehouse | Sprouts Farmers vs. AMCON Distributing |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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