Correlation Between Chefs Warehouse and Kroger
Can any of the company-specific risk be diversified away by investing in both Chefs Warehouse 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 Chefs Warehouse and Kroger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Chefs Warehouse and Kroger Company, you can compare the effects of market volatilities on Chefs Warehouse 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 Chefs Warehouse with a short position of Kroger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chefs Warehouse and Kroger.
Diversification Opportunities for Chefs Warehouse and Kroger
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chefs and Kroger is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding The Chefs Warehouse and Kroger Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kroger Company and Chefs Warehouse 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 The Chefs Warehouse 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 Company has no effect on the direction of Chefs Warehouse i.e., Chefs Warehouse and Kroger go up and down completely randomly.
Pair Corralation between Chefs Warehouse and Kroger
Given the investment horizon of 90 days The Chefs Warehouse is expected to generate 1.8 times more return on investment than Kroger. However, Chefs Warehouse is 1.8 times more volatile than Kroger Company. It trades about 0.04 of its potential returns per unit of risk. Kroger Company is currently generating about 0.05 per unit of risk. If you would invest 3,295 in The Chefs Warehouse on August 30, 2024 and sell it today you would earn a total of 1,161 from holding The Chefs Warehouse or generate 35.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
The Chefs Warehouse vs. Kroger Company
Performance |
| Timeline |
| Chefs Warehouse |
| Kroger Company |
Chefs Warehouse and Kroger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chefs Warehouse and Kroger
The main advantage of trading using opposite Chefs Warehouse and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chefs Warehouse 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.| Chefs Warehouse vs. US Foods Holding | Chefs Warehouse vs. Sysco | Chefs Warehouse vs. SpartanNash Co | Chefs Warehouse vs. Calavo Growers |
| Kroger vs. Grocery Outlet Holding | Kroger vs. Sprouts Farmers Market | Kroger vs. Sendas Distribuidora SA | Kroger vs. Weis Markets |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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