Correlation Between Grocery Outlet and Safety Shot

Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and Safety Shot 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 Safety Shot 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 Safety Shot, you can compare the effects of market volatilities on Grocery Outlet and Safety Shot 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 Safety Shot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and Safety Shot.

Diversification Opportunities for Grocery Outlet and Safety Shot

-0.32

Correlation Coefficient

Grocery Outlet  Safety Shot

Very good diversification

The 3 months correlation between Grocery and Safety is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Safety Shot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Shot 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 Safety Shot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Shot has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Safety Shot go up and down completely randomly.

Pair Corralation between Grocery Outlet and Safety Shot

Allowing for the 90-day total investment horizon Grocery Outlet is expected to generate 6.91 times less return on investment than Safety Shot. But when comparing it to its historical volatility, Grocery Outlet Holding is 4.83 times less risky than Safety Shot. It trades about 0.03 of its potential returns per unit of risk. Safety Shot is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  28.00  in Safety Shot on September 21, 2024 and sell it today you would lose (10.00) from holding Safety Shot or give up 35.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.63%
Values	Daily Returns

Grocery Outlet Holding  vs.  Safety Shot

Grocery Outlet Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grocery Outlet Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Grocery Outlet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Safety Shot

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Safety Shot are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Safety Shot showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grocery Outlet and Safety Shot

The main advantage of trading using opposite Grocery Outlet and Safety Shot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet position performs unexpectedly, Safety Shot 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 Safety Shot will offset losses from the drop in Safety Shot's long position.

The idea behind Grocery Outlet Holding and Safety Shot 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.