Correlation Between United Parcel and Kroger
Can any of the company-specific risk be diversified away by investing in both United Parcel 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 United Parcel and Kroger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Parcel Service and Kroger Co, you can compare the effects of market volatilities on United Parcel 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 United Parcel with a short position of Kroger. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Parcel and Kroger.
Diversification Opportunities for United Parcel and Kroger
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Kroger is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding United Parcel Service and Kroger Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kroger and United Parcel 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 United Parcel Service 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 United Parcel i.e., United Parcel and Kroger go up and down completely randomly.
Pair Corralation between United Parcel and Kroger
Assuming the 90 days trading horizon United Parcel Service is expected to under-perform the Kroger. In addition to that, United Parcel is 1.16 times more volatile than Kroger Co. It trades about -0.02 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 4,722 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 |
United Parcel Service vs. Kroger Co
Performance |
| Timeline |
| United Parcel Service |
| Kroger |
United Parcel and Kroger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Parcel and Kroger
The main advantage of trading using opposite United Parcel and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Parcel 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.| United Parcel vs. Charter Communications Cl | United Parcel vs. Worldwide Healthcare Trust | United Parcel vs. Target Healthcare REIT | United Parcel vs. Primary Health Properties |
| Kroger vs. PPHE Hotel Group | Kroger vs. Roebuck Food Group | Kroger vs. Greenroc Mining PLC | Kroger vs. Ecofin Global Utilities |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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