Correlation Between Health Care and Grocery Outlet
Can any of the company-specific risk be diversified away by investing in both Health Care 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 Health Care and Grocery Outlet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Care Select and Grocery Outlet Holding, you can compare the effects of market volatilities on Health Care 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 Health Care with a short position of Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Grocery Outlet.
Diversification Opportunities for Health Care and Grocery Outlet
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Health and Grocery is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Select 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 Health Care 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 Health Care Select 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 Health Care i.e., Health Care and Grocery Outlet go up and down completely randomly.
Pair Corralation between Health Care and Grocery Outlet
Assuming the 90 days trading horizon Health Care is expected to generate 3.42 times less return on investment than Grocery Outlet. But when comparing it to its historical volatility, Health Care Select is 4.49 times less risky than Grocery Outlet. It trades about 0.02 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,108 in Grocery Outlet Holding on September 2, 2024 and sell it today you would lose (8.00) from holding Grocery Outlet Holding or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Care Select vs. Grocery Outlet Holding
Performance |
| Timeline |
Health Care and Grocery Outlet Volatility Contrast
Predicted Return Density |
| Returns |
Health Care Select
Pair trading matchups for Health Care
Grocery Outlet Holding
Pair trading matchups for Grocery Outlet
Pair Trading with Health Care and Grocery Outlet
The main advantage of trading using opposite Health Care and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care 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.| Health Care vs. Brunswick | Health Care vs. BRP Inc | Health Care vs. Harmony Gold Mining | Health Care vs. United Parks Resorts |
| Grocery Outlet vs. Natural Grocers by | Grocery Outlet vs. Village Super Market | Grocery Outlet vs. Ingles Markets Incorporated | Grocery Outlet vs. Ocado Group plc |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |