Correlation Between Virco Manufacturing and Grocery Outlet
Can any of the company-specific risk be diversified away by investing in both Virco Manufacturing 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 Virco Manufacturing and Grocery Outlet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virco Manufacturing and Grocery Outlet Holding, you can compare the effects of market volatilities on Virco Manufacturing 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 Virco Manufacturing with a short position of Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virco Manufacturing and Grocery Outlet.
Diversification Opportunities for Virco Manufacturing and Grocery Outlet
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Virco and Grocery is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Virco Manufacturing 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 Virco Manufacturing 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 Virco Manufacturing 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 Virco Manufacturing i.e., Virco Manufacturing and Grocery Outlet go up and down completely randomly.
Pair Corralation between Virco Manufacturing and Grocery Outlet
Given the investment horizon of 90 days Virco Manufacturing is expected to generate 1.74 times more return on investment than Grocery Outlet. However, Virco Manufacturing is 1.74 times more volatile than Grocery Outlet Holding. It trades about 0.11 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about -0.02 per unit of risk. If you would invest 381.00 in Virco Manufacturing on August 31, 2024 and sell it today you would earn a total of 1,261 from holding Virco Manufacturing or generate 330.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virco Manufacturing vs. Grocery Outlet Holding
Performance |
| Timeline |
| Virco Manufacturing |
| Grocery Outlet Holding |
Virco Manufacturing and Grocery Outlet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virco Manufacturing and Grocery Outlet
The main advantage of trading using opposite Virco Manufacturing and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virco Manufacturing 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.| Virco Manufacturing vs. Bassett Furniture Industries | Virco Manufacturing vs. Hooker Furniture | Virco Manufacturing vs. Natuzzi SpA | Virco Manufacturing vs. Flexsteel Industries |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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