Correlation Between Group 1 and Kohls Corp
Can any of the company-specific risk be diversified away by investing in both Group 1 and Kohls Corp 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 Group 1 and Kohls Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Group 1 Automotive and Kohls Corp, you can compare the effects of market volatilities on Group 1 and Kohls Corp 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 Group 1 with a short position of Kohls Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group 1 and Kohls Corp.
Diversification Opportunities for Group 1 and Kohls Corp
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Group and Kohls is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Group 1 Automotive and Kohls Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kohls Corp and Group 1 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 Group 1 Automotive are associated (or correlated) with Kohls Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kohls Corp has no effect on the direction of Group 1 i.e., Group 1 and Kohls Corp go up and down completely randomly.
Pair Corralation between Group 1 and Kohls Corp
Considering the 90-day investment horizon Group 1 Automotive is expected to generate 0.51 times more return on investment than Kohls Corp. However, Group 1 Automotive is 1.98 times less risky than Kohls Corp. It trades about 0.24 of its potential returns per unit of risk. Kohls Corp is currently generating about -0.19 per unit of risk. If you would invest 37,791 in Group 1 Automotive on August 31, 2024 and sell it today you would earn a total of 4,985 from holding Group 1 Automotive or generate 13.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Group 1 Automotive vs. Kohls Corp
Performance |
| Timeline |
| Group 1 Automotive |
| Kohls Corp |
Group 1 and Kohls Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Group 1 and Kohls Corp
The main advantage of trading using opposite Group 1 and Kohls Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Group 1 position performs unexpectedly, Kohls Corp 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 Kohls Corp will offset losses from the drop in Kohls Corp's long position.| Group 1 vs. Penske Automotive Group | Group 1 vs. Lithia Motors | Group 1 vs. AutoNation | Group 1 vs. Asbury Automotive Group |
| Kohls Corp vs. Nordstrom | Kohls Corp vs. Dillards | Kohls Corp vs. Marks Spencer Group | Kohls Corp vs. Marks and Spencer |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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