Correlation Between Arthur J and Sprouts Farmers

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

By analyzing existing cross correlation between Arthur J Gallagher and Sprouts Farmers Market, you can compare the effects of market volatilities on Arthur J and Sprouts Farmers 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 Arthur J with a short position of Sprouts Farmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arthur J and Sprouts Farmers.

Diversification Opportunities for Arthur J and Sprouts Farmers

0.47

Correlation Coefficient

Arthur J  Sprouts Farmers

Very weak diversification

The 3 months correlation between Arthur and Sprouts is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Arthur J Gallagher and Sprouts Farmers Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprouts Farmers Market and Arthur J 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 Arthur J Gallagher are associated (or correlated) with Sprouts Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprouts Farmers Market has no effect on the direction of Arthur J i.e., Arthur J and Sprouts Farmers go up and down completely randomly.

Pair Corralation between Arthur J and Sprouts Farmers

Considering the 90-day investment horizon Arthur J Gallagher is expected to under-perform the Sprouts Farmers. But the stock apears to be less risky and, when comparing its historical volatility, Arthur J Gallagher is 1.41 times less risky than Sprouts Farmers. The stock trades about -0.15 of its potential returns per unit of risk. The Sprouts Farmers Market is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  17,393  in Sprouts Farmers Market on May 2, 2025 and sell it today you would lose (2,239) from holding Sprouts Farmers Market or give up 12.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Arthur J Gallagher  vs.  Sprouts Farmers Market

Arthur J Gallagher

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arthur J Gallagher has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward-looking indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Sprouts Farmers Market

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sprouts Farmers Market has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in August 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Arthur J and Sprouts Farmers

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

The idea behind Arthur J Gallagher and Sprouts Farmers Market 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.