Correlation Between Kroger and Grocery Outlet
Can any of the company-specific risk be diversified away by investing in both Kroger and Grocery Outlet 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 Grocery Outlet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kroger Company and Grocery Outlet Holding, you can compare the effects of market volatilities on Kroger and Grocery Outlet 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 Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kroger and Grocery Outlet.
Diversification Opportunities for Kroger and Grocery Outlet
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Kroger and Grocery is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Company and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding 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 Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of Kroger i.e., Kroger and Grocery Outlet go up and down completely randomly.
Pair Corralation between Kroger and Grocery Outlet
Allowing for the 90-day total investment horizon Kroger is expected to generate 4.26 times less return on investment than Grocery Outlet. But when comparing it to its historical volatility, Kroger Company is 4.06 times less risky than Grocery Outlet. It trades about 0.2 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,684 in Grocery Outlet Holding on August 28, 2024 and sell it today you would earn a total of 404.00 from holding Grocery Outlet Holding or generate 23.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kroger Company vs. Grocery Outlet Holding
Performance |
| Timeline |
| Kroger Company |
| Grocery Outlet Holding |
Kroger and Grocery Outlet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kroger and Grocery Outlet
The main advantage of trading using opposite Kroger and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kroger position performs unexpectedly, Grocery Outlet 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 Grocery Outlet will offset losses from the drop in Grocery Outlet's long position.| Kroger vs. Innovative Food Hldg | Kroger vs. Calavo Growers | Kroger vs. The Chefs Warehouse | Kroger vs. AMCON Distributing |
| Grocery Outlet vs. Innovative Food Hldg | Grocery Outlet vs. Calavo Growers | Grocery Outlet vs. The Chefs Warehouse | Grocery Outlet 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 CEOs Directory module to screen CEOs from public companies around the world.
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