Correlation Between Sprouts Farmers and Natural Grocers
Can any of the company-specific risk be diversified away by investing in both Sprouts Farmers 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 Sprouts Farmers and Natural Grocers 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 Natural Grocers by, you can compare the effects of market volatilities on Sprouts Farmers 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 Sprouts Farmers with a short position of Natural Grocers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprouts Farmers and Natural Grocers.
Diversification Opportunities for Sprouts Farmers and Natural Grocers
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sprouts and Natural is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sprouts Farmers Market 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 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 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 Sprouts Farmers i.e., Sprouts Farmers and Natural Grocers go up and down completely randomly.
Pair Corralation between Sprouts Farmers and Natural Grocers
Considering the 90-day investment horizon Sprouts Farmers is expected to generate 2.74 times less return on investment than Natural Grocers. But when comparing it to its historical volatility, Sprouts Farmers Market is 2.79 times less risky than Natural Grocers. It trades about 0.46 of its potential returns per unit of risk. Natural Grocers by is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 2,720 in Natural Grocers by on August 27, 2024 and sell it today you would earn a total of 1,978 from holding Natural Grocers by or generate 72.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprouts Farmers Market vs. Natural Grocers by
Performance |
| Timeline |
| Sprouts Farmers Market |
| Natural Grocers by |
Sprouts Farmers and Natural Grocers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprouts Farmers and Natural Grocers
The main advantage of trading using opposite Sprouts Farmers and Natural Grocers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprouts Farmers 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.| Sprouts Farmers vs. Innovative Food Hldg | Sprouts Farmers vs. Calavo Growers | Sprouts Farmers vs. The Chefs Warehouse | Sprouts Farmers vs. AMCON Distributing |
| Natural Grocers vs. Innovative Food Hldg | Natural Grocers vs. Calavo Growers | Natural Grocers vs. The Chefs Warehouse | Natural Grocers 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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |