Correlation Between Kroger and TESCO PLC
Can any of the company-specific risk be diversified away by investing in both Kroger and TESCO PLC 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 TESCO PLC 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 TESCO PLC ADR1, you can compare the effects of market volatilities on Kroger and TESCO PLC 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 TESCO PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kroger and TESCO PLC.
Diversification Opportunities for Kroger and TESCO PLC
Very good diversification
The 3 months correlation between Kroger and TESCO is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding The Kroger Co and TESCO PLC ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TESCO PLC ADR1 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 TESCO PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TESCO PLC ADR1 has no effect on the direction of Kroger i.e., Kroger and TESCO PLC go up and down completely randomly.
Pair Corralation between Kroger and TESCO PLC
Assuming the 90 days horizon The Kroger Co is expected to generate 1.0 times more return on investment than TESCO PLC. However, The Kroger Co is 1.0 times less risky than TESCO PLC. It trades about 0.17 of its potential returns per unit of risk. TESCO PLC ADR1 is currently generating about -0.04 per unit of risk. If you would invest 5,253 in The Kroger Co on August 29, 2024 and sell it today you would earn a total of 437.00 from holding The Kroger Co or generate 8.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Kroger Co vs. TESCO PLC ADR1
Performance |
| Timeline |
| The Kroger |
| TESCO PLC ADR1 |
Kroger and TESCO PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kroger and TESCO PLC
The main advantage of trading using opposite Kroger and TESCO PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kroger position performs unexpectedly, TESCO PLC 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 TESCO PLC will offset losses from the drop in TESCO PLC's long position.| Kroger vs. TESCO PLC LS 0633333 | Kroger vs. Superior Plus Corp | Kroger vs. NMI Holdings | Kroger vs. SIVERS SEMICONDUCTORS AB |
| TESCO PLC vs. DIVERSIFIED ROYALTY | TESCO PLC vs. REGAL ASIAN INVESTMENTS | TESCO PLC vs. Merit Medical Systems | TESCO PLC vs. Diamyd Medical AB |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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