Correlation Between Federal Agricultural and Kroger
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural 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 Federal Agricultural and Kroger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Agricultural Mortgage and The Kroger Co, you can compare the effects of market volatilities on Federal Agricultural 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 Federal Agricultural with a short position of Kroger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Kroger.
Diversification Opportunities for Federal Agricultural and Kroger
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federal and Kroger is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and The Kroger Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Kroger and Federal Agricultural 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 Federal Agricultural Mortgage 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 The Kroger has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and Kroger go up and down completely randomly.
Pair Corralation between Federal Agricultural and Kroger
Assuming the 90 days horizon Federal Agricultural Mortgage is expected to generate 1.48 times more return on investment than Kroger. However, Federal Agricultural is 1.48 times more volatile than The Kroger Co. It trades about 0.06 of its potential returns per unit of risk. The Kroger Co is currently generating about 0.04 per unit of risk. If you would invest 10,958 in Federal Agricultural Mortgage on August 26, 2024 and sell it today you would earn a total of 8,042 from holding Federal Agricultural Mortgage or generate 73.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. The Kroger Co
Performance |
| Timeline |
| Federal Agricultural |
| The Kroger |
Federal Agricultural and Kroger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and Kroger
The main advantage of trading using opposite Federal Agricultural and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural 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.| Federal Agricultural vs. Superior Plus Corp | Federal Agricultural vs. NMI Holdings | Federal Agricultural vs. Origin Agritech | Federal Agricultural vs. SIVERS SEMICONDUCTORS AB |
| Kroger vs. Games Workshop Group | Kroger vs. Titan Machinery | Kroger vs. TROPHY GAMES DEV | Kroger vs. Federal Agricultural Mortgage |
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 Stocks Directory module to find actively traded stocks across global markets.
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