Correlation Between Rite Aid and Dean Foods

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

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

Diversification Opportunities for Rite Aid and Dean Foods

0.0

Correlation Coefficient

Rite Aid  Dean Foods

Pay attention - limited upside

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

Pair Corralation between Rite Aid and Dean Foods

If you would invest  0.00  in Dean Foods on February 8, 2024 and sell it today you would earn a total of  0.00  from holding Dean Foods or generate 0.0% return on investment over 90 days.

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

Rite Aid  vs.  Dean Foods

Rite Aid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rite Aid has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Rite Aid is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Dean Foods

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Rite Aid and Dean Foods

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

The idea behind Rite Aid and Dean Foods 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.