Correlation Between PETCO HEALTH and Garofalo Health

Can any of the company-specific risk be diversified away by investing in both PETCO HEALTH and Garofalo Health 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 PETCO HEALTH and Garofalo Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PETCO HEALTH CLA and Garofalo Health Care, you can compare the effects of market volatilities on PETCO HEALTH and Garofalo Health 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 PETCO HEALTH with a short position of Garofalo Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of PETCO HEALTH and Garofalo Health.

Diversification Opportunities for PETCO HEALTH and Garofalo Health

0.42

Correlation Coefficient

PETCO HEALTH  Garofalo Health

Very weak diversification

The 3 months correlation between PETCO and Garofalo is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding PETCO HEALTH CLA and Garofalo Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garofalo Health Care and PETCO HEALTH 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 PETCO HEALTH CLA are associated (or correlated) with Garofalo Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garofalo Health Care has no effect on the direction of PETCO HEALTH i.e., PETCO HEALTH and Garofalo Health go up and down completely randomly.

Pair Corralation between PETCO HEALTH and Garofalo Health

Assuming the 90 days horizon PETCO HEALTH CLA is expected to generate 3.78 times more return on investment than Garofalo Health. However, PETCO HEALTH is 3.78 times more volatile than Garofalo Health Care. It trades about 0.0 of its potential returns per unit of risk. Garofalo Health Care is currently generating about -0.01 per unit of risk. If you would invest  270.00  in PETCO HEALTH CLA on April 20, 2025 and sell it today you would lose (14.00) from holding PETCO HEALTH CLA or give up 5.19% of portfolio value over 90 days.

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

PETCO HEALTH CLA  vs.  Garofalo Health Care

PETCO HEALTH CLA

Risk-Adjusted Performance

Very Weak

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

Garofalo Health Care

Risk-Adjusted Performance

Very Weak

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

Pair Trading with PETCO HEALTH and Garofalo Health

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

The idea behind PETCO HEALTH CLA and Garofalo Health Care 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.