Correlation Between Volkswagen and Kroger
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Kroger 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 Volkswagen and Kroger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Kroger Co, you can compare the effects of market volatilities on Volkswagen and Kroger 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 Volkswagen with a short position of Kroger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Kroger.
Diversification Opportunities for Volkswagen and Kroger
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Volkswagen and Kroger is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Kroger Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kroger and Volkswagen 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 Volkswagen AG are associated (or correlated) with Kroger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kroger has no effect on the direction of Volkswagen i.e., Volkswagen and Kroger go up and down completely randomly.
Pair Corralation between Volkswagen and Kroger
Assuming the 90 days trading horizon Volkswagen AG is expected to under-perform the Kroger. In addition to that, Volkswagen is 1.21 times more volatile than Kroger Co. It trades about -0.06 of its total potential returns per unit of risk. Kroger Co is currently generating about 0.05 per unit of volatility. 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 |
Volkswagen AG vs. Kroger Co
Performance |
| Timeline |
| Volkswagen AG |
| Kroger |
Volkswagen and Kroger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Kroger
The main advantage of trading using opposite Volkswagen and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Kroger 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 Kroger will offset losses from the drop in Kroger's long position.| Volkswagen vs. Cairo Communication SpA | Volkswagen vs. Verizon Communications | Volkswagen vs. Batm Advanced Communications | Volkswagen vs. Polar Capital Technology |
| Kroger vs. Samsung Electronics Co | Kroger vs. Samsung Electronics Co | Kroger vs. Hyundai Motor | Kroger vs. Toyota Motor Corp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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