Correlation Between Kroger and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Kroger and Volkswagen 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 Kroger and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kroger Co and Volkswagen AG, you can compare the effects of market volatilities on Kroger and Volkswagen 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 Kroger with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kroger and Volkswagen.
Diversification Opportunities for Kroger and Volkswagen
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kroger and Volkswagen is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Co and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and Kroger 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 Kroger Co are associated (or correlated) with Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of Kroger i.e., Kroger and Volkswagen go up and down completely randomly.
Pair Corralation between Kroger and Volkswagen
Assuming the 90 days trading horizon Kroger Co is expected to generate 0.83 times more return on investment than Volkswagen. However, Kroger Co is 1.21 times less risky than Volkswagen. It trades about 0.05 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.06 per unit of risk. If you would invest 4,410 in Kroger Co on August 26, 2024 and sell it today you would earn a total of 1,519 from holding Kroger Co or generate 34.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
Kroger Co vs. Volkswagen AG
Performance |
| Timeline |
| Kroger |
| Volkswagen AG |
Kroger and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kroger and Volkswagen
The main advantage of trading using opposite Kroger and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kroger position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.| Kroger vs. Samsung Electronics Co | Kroger vs. Samsung Electronics Co | Kroger vs. Hyundai Motor | Kroger vs. Toyota Motor Corp |
| Volkswagen vs. Cairo Communication SpA | Volkswagen vs. Verizon Communications | Volkswagen vs. Batm Advanced Communications | Volkswagen vs. Polar Capital Technology |
Check out your portfolio center.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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