Correlation Between Albertsons Companies and RCL Foods

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

By analyzing existing cross correlation between Albertsons Companies and RCL Foods Limited, you can compare the effects of market volatilities on Albertsons Companies and RCL Foods 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 Albertsons Companies with a short position of RCL Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albertsons Companies and RCL Foods.

Diversification Opportunities for Albertsons Companies and RCL Foods

0.0

Correlation Coefficient

Albertsons Companies  RCL Foods

Pay attention - limited upside

The 3 months correlation between Albertsons and RCL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Albertsons Companies and RCL Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCL Foods Limited and Albertsons Companies 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 Albertsons Companies are associated (or correlated) with RCL Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCL Foods Limited has no effect on the direction of Albertsons Companies i.e., Albertsons Companies and RCL Foods go up and down completely randomly.

Pair Corralation between Albertsons Companies and RCL Foods

If you would invest  1,945  in Albertsons Companies on February 3, 2025 and sell it today you would earn a total of  248.00  from holding Albertsons Companies or generate 12.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Albertsons Companies  vs.  RCL Foods Limited

Albertsons Companies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Albertsons Companies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating fundamental indicators, Albertsons Companies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

RCL Foods Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days RCL Foods Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, RCL Foods is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Albertsons Companies and RCL Foods

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

The idea behind Albertsons Companies and RCL Foods Limited 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.