Correlation Between Consumer Products and Grocery Outlet
Can any of the company-specific risk be diversified away by investing in both Consumer Products 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 Consumer Products and Grocery Outlet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumer Products Fund and Grocery Outlet Holding, you can compare the effects of market volatilities on Consumer Products 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 Consumer Products with a short position of Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Products and Grocery Outlet.
Diversification Opportunities for Consumer Products and Grocery Outlet
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Consumer and Grocery is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Products Fund 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 Consumer Products 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 Consumer Products Fund 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 Consumer Products i.e., Consumer Products and Grocery Outlet go up and down completely randomly.
Pair Corralation between Consumer Products and Grocery Outlet
Assuming the 90 days horizon Consumer Products is expected to generate 11.3 times less return on investment than Grocery Outlet. But when comparing it to its historical volatility, Consumer Products Fund is 7.24 times less risky than Grocery Outlet. It trades about 0.32 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest 1,430 in Grocery Outlet Holding on September 1, 2024 and sell it today you would earn a total of 670.00 from holding Grocery Outlet Holding or generate 46.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Consumer Products Fund vs. Grocery Outlet Holding
Performance |
| Timeline |
| Consumer Products |
| Grocery Outlet Holding |
Consumer Products and Grocery Outlet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumer Products and Grocery Outlet
The main advantage of trading using opposite Consumer Products and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumer Products 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.| Consumer Products vs. Health Care Fund | Consumer Products vs. Banking Fund Investor | Consumer Products vs. Retailing Fund Investor | Consumer Products vs. Financial Services Fund |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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