Correlation Between Grocery Outlet and Wing Yip

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

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

Diversification Opportunities for Grocery Outlet and Wing Yip

-0.63

Correlation Coefficient

Grocery Outlet  Wing Yip

Excellent diversification

The 3 months correlation between Grocery and Wing is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Wing Yip Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wing Yip Food and Grocery Outlet 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 Grocery Outlet Holding are associated (or correlated) with Wing Yip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wing Yip Food has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and Wing Yip go up and down completely randomly.

Pair Corralation between Grocery Outlet and Wing Yip

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the Wing Yip. But the stock apears to be less risky and, when comparing its historical volatility, Grocery Outlet Holding is 1.31 times less risky than Wing Yip. The stock trades about -0.01 of its potential returns per unit of risk. The Wing Yip Food is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  463.00  in Wing Yip Food on January 3, 2025 and sell it today you would earn a total of  436.00  from holding Wing Yip Food or generate 94.17% return on investment over 90 days.

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

Grocery Outlet Holding  vs.  Wing Yip Food

Grocery Outlet Holding

Risk-Adjusted Performance

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 very healthy basic indicators, Grocery Outlet is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Wing Yip Food

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wing Yip Food are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical indicators, Wing Yip reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grocery Outlet and Wing Yip

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

The idea behind Grocery Outlet Holding and Wing Yip Food 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.