Correlation Between Kroger and Above Food
Can any of the company-specific risk be diversified away by investing in both Kroger and Above Food 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 Above Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kroger Company and Above Food Ingredients, you can compare the effects of market volatilities on Kroger and Above Food 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 Above Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kroger and Above Food.
Diversification Opportunities for Kroger and Above Food
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kroger and Above is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Company and Above Food Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Above Food Ingredients 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 Kroger Company are associated (or correlated) with Above Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Above Food Ingredients has no effect on the direction of Kroger i.e., Kroger and Above Food go up and down completely randomly.
Pair Corralation between Kroger and Above Food
Allowing for the 90-day total investment horizon Kroger is expected to generate 18.57 times less return on investment than Above Food. But when comparing it to its historical volatility, Kroger Company is 21.87 times less risky than Above Food. It trades about 0.2 of its potential returns per unit of risk. Above Food Ingredients is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1.51 in Above Food Ingredients on August 28, 2024 and sell it today you would earn a total of 0.49 from holding Above Food Ingredients or generate 32.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kroger Company vs. Above Food Ingredients
Performance |
| Timeline |
| Kroger Company |
| Above Food Ingredients |
Kroger and Above Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kroger and Above Food
The main advantage of trading using opposite Kroger and Above Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kroger position performs unexpectedly, Above Food 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 Above Food will offset losses from the drop in Above Food's long position.| Kroger vs. Innovative Food Hldg | Kroger vs. Calavo Growers | Kroger vs. The Chefs Warehouse | Kroger vs. AMCON Distributing |
| Above Food vs. Borealis Foods | Above Food vs. CIMG Inc | Above Food vs. Mamas Creations | Above Food vs. Natural Alternatives International |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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