Correlation Between Dingdong ADR and Albertsons Companies

Can any of the company-specific risk be diversified away by investing in both Dingdong ADR 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 Dingdong ADR and Albertsons Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dingdong ADR and Albertsons Companies, you can compare the effects of market volatilities on Dingdong ADR 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 Dingdong ADR with a short position of Albertsons Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dingdong ADR and Albertsons Companies.

Diversification Opportunities for Dingdong ADR and Albertsons Companies

0.45

Correlation Coefficient

Dingdong ADR  Albertsons Companies

Very weak diversification

The 3 months correlation between Dingdong and Albertsons is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dingdong ADR and Albertsons Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albertsons Companies and Dingdong ADR 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 Dingdong ADR 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 Dingdong ADR i.e., Dingdong ADR and Albertsons Companies go up and down completely randomly.

Pair Corralation between Dingdong ADR and Albertsons Companies

Considering the 90-day investment horizon Dingdong ADR is expected to generate 4.57 times more return on investment than Albertsons Companies. However, Dingdong ADR is 4.57 times more volatile than Albertsons Companies. It trades about 0.16 of its potential returns per unit of risk. Albertsons Companies is currently generating about 0.1 per unit of risk. If you would invest  251.00  in Dingdong ADR on September 7, 2024 and sell it today you would earn a total of  156.00  from holding Dingdong ADR or generate 62.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Dingdong ADR  vs.  Albertsons Companies

Dingdong ADR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dingdong ADR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Dingdong ADR disclosed solid returns over the last few months and may actually be approaching a breakup point.

Albertsons Companies

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Albertsons Companies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating fundamental indicators, Albertsons Companies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dingdong ADR and Albertsons Companies

The main advantage of trading using opposite Dingdong ADR and Albertsons Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dingdong ADR 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.

The idea behind Dingdong ADR 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.