Correlation Between Kroger and Dollar General
Can any of the company-specific risk be diversified away by investing in both Kroger and Dollar General 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 Dollar General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kroger Company and Dollar General, you can compare the effects of market volatilities on Kroger and Dollar General 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 Dollar General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kroger and Dollar General.
Diversification Opportunities for Kroger and Dollar General
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kroger and Dollar is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Company and Dollar General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dollar General 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 Dollar General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dollar General has no effect on the direction of Kroger i.e., Kroger and Dollar General go up and down completely randomly.
Pair Corralation between Kroger and Dollar General
Allowing for the 90-day total investment horizon Kroger Company is expected to generate 0.7 times more return on investment than Dollar General. However, Kroger Company is 1.43 times less risky than Dollar General. It trades about 0.2 of its potential returns per unit of risk. Dollar General is currently generating about -0.13 per unit of risk. If you would invest 5,680 in Kroger Company on August 27, 2024 and sell it today you would earn a total of 329.00 from holding Kroger Company or generate 5.79% 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. Dollar General
Performance |
| Timeline |
| Kroger Company |
| Dollar General |
Kroger and Dollar General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kroger and Dollar General
The main advantage of trading using opposite Kroger and Dollar General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kroger position performs unexpectedly, Dollar General 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 Dollar General will offset losses from the drop in Dollar General's long position.| Kroger vs. Innovative Food Hldg | Kroger vs. Calavo Growers | Kroger vs. The Chefs Warehouse | Kroger vs. AMCON Distributing |
| Dollar General vs. Innovative Food Hldg | Dollar General vs. Calavo Growers | Dollar General vs. The Chefs Warehouse | Dollar General vs. AMCON Distributing |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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