Correlation Between Grocery Outlet and Albertsons Companies

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Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and Albertsons Companies 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 Grocery Outlet and Albertsons Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grocery Outlet Holding and Albertsons Companies, you can compare the effects of market volatilities on Grocery Outlet and Albertsons Companies 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 Grocery Outlet with a short position of Albertsons Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and Albertsons Companies.

Diversification Opportunities for Grocery Outlet and Albertsons Companies

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between Grocery and Albertsons is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Albertsons Companies Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albertsons Companies and Grocery Outlet 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 Grocery Outlet Holding are associated (or correlated) with Albertsons Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albertsons Companies has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Albertsons Companies go up and down completely randomly.

Pair Corralation between Grocery Outlet and Albertsons Companies

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the Albertsons Companies. But the stock apears to be less risky and, when comparing its historical volatility, Grocery Outlet Holding is 1.07 times less risky than Albertsons Companies. The stock trades about 0.0 of its potential returns per unit of risk. The Albertsons Companies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,403  in Albertsons Companies on July 6, 2022 and sell it today you would earn a total of  1,169  from holding Albertsons Companies or generate 83.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Grocery Outlet Holding  vs.  Albertsons Companies Inc

 Performance (%) 
       Timeline  
Grocery Outlet Holding 
Grocery Performance
0 of 100
Over the last 90 days Grocery Outlet Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in November 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Grocery Price Channel

Albertsons Companies 
Albertsons Performance
0 of 100
Over the last 90 days Albertsons Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Albertsons Companies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Albertsons Price Channel

Grocery Outlet and Albertsons Companies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Grocery Outlet and Albertsons Companies

The main advantage of trading using opposite Grocery Outlet and Albertsons Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet position performs unexpectedly, Albertsons Companies 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 Albertsons Companies will offset losses from the drop in Albertsons Companies' long position.
Grocery Outlet vs. The Travelers Companies
The idea behind Grocery Outlet Holding and Albertsons Companies 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.
Albertsons Companies vs. The Travelers Companies
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 Commodity Channel Index module to use Commodity Channel Index to analyze current equity momentum.

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