Correlation Between Kroger and CHS
Can any of the company-specific risk be diversified away by investing in both Kroger and CHS 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 CHS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kroger Company and CHS Inc CP, you can compare the effects of market volatilities on Kroger and CHS 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 CHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kroger and CHS.
Diversification Opportunities for Kroger and CHS
Excellent diversification
The 3 months correlation between Kroger and CHS is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Company and CHS Inc CP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHS Inc CP 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 CHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHS Inc CP has no effect on the direction of Kroger i.e., Kroger and CHS go up and down completely randomly.
Pair Corralation between Kroger and CHS
Allowing for the 90-day total investment horizon Kroger Company is expected to generate 1.4 times more return on investment than CHS. However, Kroger is 1.4 times more volatile than CHS Inc CP. It trades about 0.06 of its potential returns per unit of risk. CHS Inc CP is currently generating about 0.02 per unit of risk. If you would invest 4,618 in Kroger Company on September 12, 2024 and sell it today you would earn a total of 1,455 from holding Kroger Company or generate 31.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kroger Company vs. CHS Inc CP
Performance |
| Timeline |
| Kroger Company |
| CHS Inc CP |
Kroger and CHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kroger and CHS
The main advantage of trading using opposite Kroger and CHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kroger position performs unexpectedly, CHS 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 CHS will offset losses from the drop in CHS's long position.| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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