Correlation Between Grocery Outlet and TRIMBLE

Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and TRIMBLE 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 TRIMBLE 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 TRIMBLE INC 475, you can compare the effects of market volatilities on Grocery Outlet and TRIMBLE 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 TRIMBLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and TRIMBLE.

Diversification Opportunities for Grocery Outlet and TRIMBLE

0.18

Correlation Coefficient

Grocery Outlet  TRIMBLE

Average diversification

The 3 months correlation between Grocery and TRIMBLE is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and TRIMBLE INC 475 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRIMBLE INC 475 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 TRIMBLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRIMBLE INC 475 has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and TRIMBLE go up and down completely randomly.

Pair Corralation between Grocery Outlet and TRIMBLE

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the TRIMBLE. In addition to that, Grocery Outlet is 11.89 times more volatile than TRIMBLE INC 475. It trades about -0.03 of its total potential returns per unit of risk. TRIMBLE INC 475 is currently generating about -0.04 per unit of volatility. If you would invest  9,978  in TRIMBLE INC 475 on September 29, 2024 and sell it today you would lose (59.00) from holding TRIMBLE INC 475 or give up 0.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	61.9%
Values	Daily Returns

Grocery Outlet Holding  vs.  TRIMBLE INC 475

Grocery Outlet Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grocery Outlet Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

TRIMBLE INC 475

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRIMBLE INC 475 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, TRIMBLE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grocery Outlet and TRIMBLE

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

The idea behind Grocery Outlet Holding and TRIMBLE INC 475 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.