Correlation Between Kroger and Seven I
Can any of the company-specific risk be diversified away by investing in both Kroger and Seven I 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 Kroger and Seven I into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Kroger Co and Seven i Holdings, you can compare the effects of market volatilities on Kroger and Seven I 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 Kroger with a short position of Seven I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kroger and Seven I.
Diversification Opportunities for Kroger and Seven I
Poor diversification
The 3 months correlation between Kroger and Seven is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding The Kroger Co and Seven i Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven i Holdings and Kroger 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 Kroger Co are associated (or correlated) with Seven I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven i Holdings has no effect on the direction of Kroger i.e., Kroger and Seven I go up and down completely randomly.
Pair Corralation between Kroger and Seven I
Assuming the 90 days horizon Kroger is expected to generate 1.87 times less return on investment than Seven I. But when comparing it to its historical volatility, The Kroger Co is 1.3 times less risky than Seven I. It trades about 0.24 of its potential returns per unit of risk. Seven i Holdings is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,303 in Seven i Holdings on September 1, 2024 and sell it today you would earn a total of 315.00 from holding Seven i Holdings or generate 24.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Kroger Co vs. Seven i Holdings
Performance |
| Timeline |
| The Kroger |
| Seven i Holdings |
Kroger and Seven I Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kroger and Seven I
The main advantage of trading using opposite Kroger and Seven I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kroger position performs unexpectedly, Seven I 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 Seven I will offset losses from the drop in Seven I's long position.| Kroger vs. TESCO PLC LS 0633333 | Kroger vs. Superior Plus Corp | Kroger vs. NMI Holdings | Kroger vs. Origin Agritech |
| Seven I vs. TESCO PLC LS 0633333 | Seven I vs. Superior Plus Corp | Seven I vs. NMI Holdings | Seven I vs. Origin Agritech |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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