Correlation Between Sprouts Farmers and Metro
Can any of the company-specific risk be diversified away by investing in both Sprouts Farmers and Metro 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 Sprouts Farmers and Metro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprouts Farmers Market and Metro Inc, you can compare the effects of market volatilities on Sprouts Farmers and Metro 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 Sprouts Farmers with a short position of Metro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprouts Farmers and Metro.
Diversification Opportunities for Sprouts Farmers and Metro
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sprouts and Metro is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sprouts Farmers Market and Metro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Inc and Sprouts Farmers 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 Sprouts Farmers Market are associated (or correlated) with Metro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Inc has no effect on the direction of Sprouts Farmers i.e., Sprouts Farmers and Metro go up and down completely randomly.
Pair Corralation between Sprouts Farmers and Metro
Considering the 90-day investment horizon Sprouts Farmers Market is expected to generate 1.59 times more return on investment than Metro. However, Sprouts Farmers is 1.59 times more volatile than Metro Inc. It trades about 0.16 of its potential returns per unit of risk. Metro Inc is currently generating about 0.07 per unit of risk. If you would invest 3,352 in Sprouts Farmers Market on November 28, 2024 and sell it today you would earn a total of 11,784 from holding Sprouts Farmers Market or generate 351.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 76.32% |
| Values | Daily Returns |
Sprouts Farmers Market vs. Metro Inc
Performance |
| Timeline |
| Sprouts Farmers Market |
| Metro Inc |
Sprouts Farmers and Metro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprouts Farmers and Metro
The main advantage of trading using opposite Sprouts Farmers and Metro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprouts Farmers position performs unexpectedly, Metro 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 Metro will offset losses from the drop in Metro's long position.| Sprouts Farmers vs. Natural Grocers by | Sprouts Farmers vs. Albertsons Companies | Sprouts Farmers vs. Ingles Markets Incorporated | Sprouts Farmers vs. Village Super Market |
| Metro vs. Natural Grocers by | Metro vs. Sprouts Farmers Market | Metro vs. Albertsons Companies | Metro vs. Kroger Company |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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