Correlation Between Dingdong ADR and Albertsons Companies

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

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

Diversification Opportunities for Dingdong ADR and Albertsons Companies

-0.55

Correlation Coefficient

Dingdong ADR  Albertsons Companies

Excellent diversification

The 3 months correlation between Dingdong and Albertsons is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dingdong ADR and Albertsons Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albertsons Companies and Dingdong ADR 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 Dingdong ADR are associated (or correlated) with Albertsons Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albertsons Companies has no effect on the direction of Dingdong ADR i.e., Dingdong ADR and Albertsons Companies go up and down completely randomly.

Pair Corralation between Dingdong ADR and Albertsons Companies

Considering the 90-day investment horizon Dingdong ADR is expected to under-perform the Albertsons Companies. In addition to that, Dingdong ADR is 2.28 times more volatile than Albertsons Companies. It trades about -0.12 of its total potential returns per unit of risk. Albertsons Companies is currently generating about 0.15 per unit of volatility. If you would invest  1,965  in Albertsons Companies on January 3, 2025 and sell it today you would earn a total of  326.00  from holding Albertsons Companies or generate 16.59% return on investment over 90 days.

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

Dingdong ADR  vs.  Albertsons Companies

Dingdong ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dingdong ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in May 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Albertsons Companies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Albertsons Companies are ranked lower than 12 (%) 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.

Pair Trading with Dingdong ADR and Albertsons Companies

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

The idea behind Dingdong ADR and Albertsons Companies 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.