Correlation Between TRIMBLE and Grocery Outlet

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

By analyzing existing cross correlation between TRIMBLE INC 475 and Grocery Outlet Holding, you can compare the effects of market volatilities on TRIMBLE and Grocery Outlet 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 TRIMBLE with a short position of Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRIMBLE and Grocery Outlet.

Diversification Opportunities for TRIMBLE and Grocery Outlet

0.18

Correlation Coefficient

TRIMBLE  Grocery Outlet

Average diversification

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

Pair Corralation between TRIMBLE and Grocery Outlet

Assuming the 90 days trading horizon TRIMBLE INC 475 is expected to generate 0.08 times more return on investment than Grocery Outlet. However, TRIMBLE INC 475 is 12.31 times less risky than Grocery Outlet. It trades about 0.0 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about -0.07 per unit of risk. If you would invest  9,932  in TRIMBLE INC 475 on September 29, 2024 and sell it today you would lose (13.00) from holding TRIMBLE INC 475 or give up 0.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	76.98%
Values	Daily Returns

TRIMBLE INC 475  vs.  Grocery Outlet Holding

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.

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.

Pair Trading with TRIMBLE and Grocery Outlet

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

The idea behind TRIMBLE INC 475 and Grocery Outlet Holding 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.