Correlation Between Seven I and Grocery Outlet
Can any of the company-specific risk be diversified away by investing in both Seven I 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 Seven I and Grocery Outlet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seven i Holdings and Grocery Outlet Holding, you can compare the effects of market volatilities on Seven I 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 Seven I with a short position of Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven I and Grocery Outlet.
Diversification Opportunities for Seven I and Grocery Outlet
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Seven and Grocery is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Seven i Holdings 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 Seven I 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 Seven i Holdings 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 Seven I i.e., Seven I and Grocery Outlet go up and down completely randomly.
Pair Corralation between Seven I and Grocery Outlet
Assuming the 90 days horizon Seven I is expected to generate 3.22 times less return on investment than Grocery Outlet. In addition to that, Seven I is 1.16 times more volatile than Grocery Outlet Holding. It trades about 0.13 of its total potential returns per unit of risk. Grocery Outlet Holding is currently generating about 0.5 per unit of volatility. 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 | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Seven i Holdings vs. Grocery Outlet Holding
Performance |
| Timeline |
| Seven i Holdings |
| Grocery Outlet Holding |
Seven I and Grocery Outlet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seven I and Grocery Outlet
The main advantage of trading using opposite Seven I and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven I 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.The idea behind Seven i Holdings and Grocery Outlet Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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