Correlation Between Innovative Food and Kroger
Can any of the company-specific risk be diversified away by investing in both Innovative Food 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 Innovative Food and Kroger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovative Food Hldg and Kroger Company, you can compare the effects of market volatilities on Innovative Food 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 Innovative Food with a short position of Kroger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Food and Kroger.
Diversification Opportunities for Innovative Food and Kroger
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Innovative and Kroger is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Food Hldg and Kroger Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kroger Company and Innovative Food 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 Innovative Food Hldg 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 Innovative Food i.e., Innovative Food and Kroger go up and down completely randomly.
Pair Corralation between Innovative Food and Kroger
Given the investment horizon of 90 days Innovative Food Hldg is expected to generate 3.67 times more return on investment than Kroger. However, Innovative Food is 3.67 times more volatile than Kroger Company. It trades about 0.1 of its potential returns per unit of risk. Kroger Company is currently generating about 0.05 per unit of risk. If you would invest 25.00 in Innovative Food Hldg on August 30, 2024 and sell it today you would earn a total of 135.00 from holding Innovative Food Hldg or generate 540.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovative Food Hldg vs. Kroger Company
Performance |
| Timeline |
| Innovative Food Hldg |
| Kroger Company |
Innovative Food and Kroger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovative Food and Kroger
The main advantage of trading using opposite Innovative Food and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Food 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.| Innovative Food vs. Organto Foods | Innovative Food vs. Colabor Group | Innovative Food vs. Bunzl plc | Innovative Food vs. Hf Foods Group |
| 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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