Correlation Between Natural Grocers and J Sainsbury

Can any of the company-specific risk be diversified away by investing in both Natural Grocers and J Sainsbury 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 Natural Grocers and J Sainsbury into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Natural Grocers by and J Sainsbury plc, you can compare the effects of market volatilities on Natural Grocers and J Sainsbury 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 Natural Grocers with a short position of J Sainsbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Grocers and J Sainsbury.

Diversification Opportunities for Natural Grocers and J Sainsbury

-0.66

Correlation Coefficient

Natural Grocers  J Sainsbury

Excellent diversification

The 3 months correlation between Natural and JSNSF is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Natural Grocers by and J Sainsbury plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Sainsbury plc and Natural Grocers 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 Natural Grocers by are associated (or correlated) with J Sainsbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Sainsbury plc has no effect on the direction of Natural Grocers i.e., Natural Grocers and J Sainsbury go up and down completely randomly.

Pair Corralation between Natural Grocers and J Sainsbury

Given the investment horizon of 90 days Natural Grocers by is expected to under-perform the J Sainsbury. But the stock apears to be less risky and, when comparing its historical volatility, Natural Grocers by is 3.22 times less risky than J Sainsbury. The stock trades about -0.31 of its potential returns per unit of risk. The J Sainsbury plc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  355.00  in J Sainsbury plc on September 28, 2024 and sell it today you would lose (15.00) from holding J Sainsbury plc or give up 4.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Natural Grocers by  vs.  J Sainsbury plc

Natural Grocers by

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Natural Grocers by are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Natural Grocers exhibited solid returns over the last few months and may actually be approaching a breakup point.

J Sainsbury plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days J Sainsbury plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Natural Grocers and J Sainsbury

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

The idea behind Natural Grocers by and J Sainsbury plc 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.