Correlation Between BII Railway and Kroger
Can any of the company-specific risk be diversified away by investing in both BII Railway 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 BII Railway and Kroger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and The Kroger Co, you can compare the effects of market volatilities on BII Railway 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 BII Railway with a short position of Kroger. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and Kroger.
Diversification Opportunities for BII Railway and Kroger
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BII and Kroger is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and The Kroger Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Kroger and BII Railway 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 BII Railway Transportation 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 BII Railway i.e., BII Railway and Kroger go up and down completely randomly.
Pair Corralation between BII Railway and Kroger
Assuming the 90 days horizon BII Railway Transportation is expected to generate 1.06 times more return on investment than Kroger. However, BII Railway is 1.06 times more volatile than The Kroger Co. It trades about -0.04 of its potential returns per unit of risk. The Kroger Co is currently generating about -0.06 per unit of risk. If you would invest 2.85 in BII Railway Transportation on November 3, 2024 and sell it today you would lose (0.05) from holding BII Railway Transportation or give up 1.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BII Railway Transportation vs. The Kroger Co
Performance |
| Timeline |
| BII Railway Transpor |
| The Kroger |
BII Railway and Kroger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and Kroger
The main advantage of trading using opposite BII Railway and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway 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.| BII Railway vs. Accenture plc | BII Railway vs. International Business Machines | BII Railway vs. International Business Machines | BII Railway vs. Capgemini SE |
| Kroger vs. Eurasia Mining Plc | Kroger vs. MAGNUM MINING EXP | Kroger vs. ANGLO ASIAN MINING | Kroger vs. De Grey Mining |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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