Correlation Between Kroger and United Parcel
Can any of the company-specific risk be diversified away by investing in both Kroger and United Parcel 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 United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kroger Co and United Parcel Service, you can compare the effects of market volatilities on Kroger and United Parcel 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 United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kroger and United Parcel.
Diversification Opportunities for Kroger and United Parcel
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kroger and United is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Co and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service 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 United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of Kroger i.e., Kroger and United Parcel go up and down completely randomly.
Pair Corralation between Kroger and United Parcel
Assuming the 90 days trading horizon Kroger Co is expected to generate 0.86 times more return on investment than United Parcel. However, Kroger Co is 1.16 times less risky than United Parcel. It trades about 0.05 of its potential returns per unit of risk. United Parcel Service is currently generating about -0.02 per unit of risk. If you would invest 4,722 in Kroger Co on August 30, 2024 and sell it today you would earn a total of 1,341 from holding Kroger Co or generate 28.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.75% |
| Values | Daily Returns |
Kroger Co vs. United Parcel Service
Performance |
| Timeline |
| Kroger |
| United Parcel Service |
Kroger and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kroger and United Parcel
The main advantage of trading using opposite Kroger and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kroger position performs unexpectedly, United Parcel 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 United Parcel will offset losses from the drop in United Parcel's long position.| Kroger vs. PPHE Hotel Group | Kroger vs. Roebuck Food Group | Kroger vs. Greenroc Mining PLC | Kroger vs. Ecofin Global Utilities |
| United Parcel vs. Charter Communications Cl | United Parcel vs. Worldwide Healthcare Trust | United Parcel vs. Target Healthcare REIT | United Parcel vs. Primary Health Properties |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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