Correlation Between Sprouts Farmers and Rite Aid
Can any of the company-specific risk be diversified away by investing in both Sprouts Farmers and Rite Aid 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 Sprouts Farmers and Rite Aid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprouts Farmers Market and Rite Aid, you can compare the effects of market volatilities on Sprouts Farmers and Rite Aid 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 Sprouts Farmers with a short position of Rite Aid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprouts Farmers and Rite Aid.
Diversification Opportunities for Sprouts Farmers and Rite Aid
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sprouts and Rite is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sprouts Farmers Market and Rite Aid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rite Aid and Sprouts Farmers 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 Sprouts Farmers Market are associated (or correlated) with Rite Aid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rite Aid has no effect on the direction of Sprouts Farmers i.e., Sprouts Farmers and Rite Aid go up and down completely randomly.
Pair Corralation between Sprouts Farmers and Rite Aid
Considering the 90-day investment horizon Sprouts Farmers Market is expected to generate 0.42 times more return on investment than Rite Aid. However, Sprouts Farmers Market is 2.38 times less risky than Rite Aid. It trades about 0.26 of its potential returns per unit of risk. Rite Aid is currently generating about -0.26 per unit of risk. If you would invest 4,015 in Sprouts Farmers Market on February 6, 2024 and sell it today you would earn a total of 3,482 from holding Sprouts Farmers Market or generate 86.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 22.76% |
Values | Daily Returns |
Sprouts Farmers Market vs. Rite Aid
Performance |
Timeline |
Sprouts Farmers Market |
Rite Aid |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sprouts Farmers and Rite Aid Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sprouts Farmers and Rite Aid
The main advantage of trading using opposite Sprouts Farmers and Rite Aid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprouts Farmers position performs unexpectedly, Rite Aid 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 Rite Aid will offset losses from the drop in Rite Aid's long position.The idea behind Sprouts Farmers Market and Rite Aid 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.Rite Aid vs. PetMed Express | Rite Aid vs. High Tide | Rite Aid vs. China Jo Jo Drugstores | Rite Aid vs. Bimi International Medical |
Check out your portfolio center.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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
CEOs Directory Screen CEOs from public companies around the world | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |