Correlation Between Kroger and US Foods
Can any of the company-specific risk be diversified away by investing in both Kroger and US Foods 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 US Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kroger Company and US Foods Holding, you can compare the effects of market volatilities on Kroger and US Foods 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 US Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kroger and US Foods.
Diversification Opportunities for Kroger and US Foods
Almost no diversification
The 3 months correlation between Kroger and USFD is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Company and US Foods Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Foods 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 US Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Foods Holding has no effect on the direction of Kroger i.e., Kroger and US Foods go up and down completely randomly.
Pair Corralation between Kroger and US Foods
Allowing for the 90-day total investment horizon Kroger is expected to generate 3.09 times less return on investment than US Foods. In addition to that, Kroger is 1.04 times more volatile than US Foods Holding. It trades about 0.11 of its total potential returns per unit of risk. US Foods Holding is currently generating about 0.35 per unit of volatility. If you would invest 6,116 in US Foods Holding on August 24, 2024 and sell it today you would earn a total of 676.00 from holding US Foods Holding or generate 11.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kroger Company vs. US Foods Holding
Performance |
| Timeline |
| Kroger Company |
| US Foods Holding |
Kroger and US Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kroger and US Foods
The main advantage of trading using opposite Kroger and US Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kroger position performs unexpectedly, US Foods 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 US Foods will offset losses from the drop in US Foods' long position.| Kroger vs. Natural Grocers by | Kroger vs. Village Super Market | Kroger vs. Ingles Markets Incorporated | Kroger vs. Ocado Group plc |
| US Foods vs. The Chefs Warehouse | US Foods vs. Sysco | US Foods vs. SpartanNash Co | US Foods vs. Calavo Growers |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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