Correlation Between Kroger and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both Kroger and Consumer Staples 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 Consumer Staples into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kroger Company and Consumer Staples Portfolio, you can compare the effects of market volatilities on Kroger and Consumer Staples 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 Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kroger and Consumer Staples.
Diversification Opportunities for Kroger and Consumer Staples
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kroger and Consumer is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Company and Consumer Staples Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Por 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 Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Por has no effect on the direction of Kroger i.e., Kroger and Consumer Staples go up and down completely randomly.
Pair Corralation between Kroger and Consumer Staples
Allowing for the 90-day total investment horizon Kroger Company is expected to generate 1.93 times more return on investment than Consumer Staples. However, Kroger is 1.93 times more volatile than Consumer Staples Portfolio. It trades about 0.37 of its potential returns per unit of risk. Consumer Staples Portfolio is currently generating about 0.26 per unit of risk. If you would invest 5,547 in Kroger Company on September 1, 2024 and sell it today you would earn a total of 561.00 from holding Kroger Company or generate 10.11% 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. Consumer Staples Portfolio
Performance |
| Timeline |
| Kroger Company |
| Consumer Staples Por |
Kroger and Consumer Staples Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kroger and Consumer Staples
The main advantage of trading using opposite Kroger and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kroger position performs unexpectedly, Consumer Staples 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 Consumer Staples will offset losses from the drop in Consumer Staples' 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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