Correlation Between Kroger and Walmart
Can any of the company-specific risk be diversified away by investing in both Kroger and Walmart 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 Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kroger Company and Walmart, you can compare the effects of market volatilities on Kroger and Walmart 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 Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kroger and Walmart.
Diversification Opportunities for Kroger and Walmart
Poor diversification
The 3 months correlation between Kroger and Walmart is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Company and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Kroger i.e., Kroger and Walmart go up and down completely randomly.
Pair Corralation between Kroger and Walmart
Allowing for the 90-day total investment horizon Kroger is expected to generate 1.92 times less return on investment than Walmart. In addition to that, Kroger is 1.17 times more volatile than Walmart. It trades about 0.06 of its total potential returns per unit of risk. Walmart is currently generating about 0.14 per unit of volatility. If you would invest 4,541 in Walmart on December 6, 2024 and sell it today you would earn a total of 4,923 from holding Walmart or generate 108.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kroger Company vs. Walmart
Performance |
| Timeline |
| Kroger Company |
| Walmart |
Kroger and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kroger and Walmart
The main advantage of trading using opposite Kroger and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kroger position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.| Kroger vs. Grocery Outlet Holding | Kroger vs. Sprouts Farmers Market | Kroger vs. Weis Markets | Kroger vs. Ingles Markets Incorporated |
| Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield | Walmart vs. Morningstar Unconstrained Allocation | Walmart vs. Via Renewables |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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