Correlation Between Kroger and Primo Brands
Can any of the company-specific risk be diversified away by investing in both Kroger and Primo Brands 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 Primo Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kroger Company and Primo Brands, you can compare the effects of market volatilities on Kroger and Primo Brands 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 Primo Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kroger and Primo Brands.
Diversification Opportunities for Kroger and Primo Brands
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kroger and Primo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Company and Primo Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primo Brands 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 Primo Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primo Brands has no effect on the direction of Kroger i.e., Kroger and Primo Brands go up and down completely randomly.
Pair Corralation between Kroger and Primo Brands
Allowing for the 90-day total investment horizon Kroger is expected to generate 2.16 times less return on investment than Primo Brands. But when comparing it to its historical volatility, Kroger Company is 1.24 times less risky than Primo Brands. It trades about 0.05 of its potential returns per unit of risk. Primo Brands is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,427 in Primo Brands on August 30, 2024 and sell it today you would earn a total of 1,435 from holding Primo Brands or generate 100.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kroger Company vs. Primo Brands
Performance |
| Timeline |
| Kroger Company |
| Primo Brands |
Kroger and Primo Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kroger and Primo Brands
The main advantage of trading using opposite Kroger and Primo Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kroger position performs unexpectedly, Primo Brands 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 Primo Brands will offset losses from the drop in Primo Brands' long position.| Kroger vs. Grocery Outlet Holding | Kroger vs. Sprouts Farmers Market | Kroger vs. Sendas Distribuidora SA | Kroger vs. Weis Markets |
| Primo Brands vs. Here Media | Primo Brands vs. Dave Busters Entertainment | Primo Brands vs. Southwest Airlines | Primo Brands vs. Playtech plc |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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