Correlation Between United Breweries and Kroger
Can any of the company-specific risk be diversified away by investing in both United Breweries 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 Breweries and Kroger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Breweries Co and The Kroger Co, you can compare the effects of market volatilities on United Breweries 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 Breweries with a short position of Kroger. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and Kroger.
Diversification Opportunities for United Breweries and Kroger
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Kroger is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and The Kroger Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Kroger and United Breweries 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 Breweries Co 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 United Breweries i.e., United Breweries and Kroger go up and down completely randomly.
Pair Corralation between United Breweries and Kroger
Assuming the 90 days trading horizon United Breweries Co is expected to generate 1.07 times more return on investment than Kroger. However, United Breweries is 1.07 times more volatile than The Kroger Co. It trades about 0.24 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 1,060 in United Breweries Co on November 3, 2024 and sell it today you would earn a total of 90.00 from holding United Breweries Co or generate 8.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Breweries Co vs. The Kroger Co
Performance |
| Timeline |
| United Breweries |
| The Kroger |
United Breweries and Kroger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and Kroger
The main advantage of trading using opposite United Breweries and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries 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 Breweries vs. SENECA FOODS A | United Breweries vs. Suntory Beverage Food | United Breweries vs. Molson Coors Beverage | United Breweries vs. Thai Beverage Public |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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