Correlation Between Kroger and Willamette Valley
Can any of the company-specific risk be diversified away by investing in both Kroger and Willamette Valley 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 Willamette Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kroger Company and Willamette Valley Vineyards, you can compare the effects of market volatilities on Kroger and Willamette Valley 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 Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kroger and Willamette Valley.
Diversification Opportunities for Kroger and Willamette Valley
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kroger and Willamette is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Company and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley 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 Willamette Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willamette Valley has no effect on the direction of Kroger i.e., Kroger and Willamette Valley go up and down completely randomly.
Pair Corralation between Kroger and Willamette Valley
Allowing for the 90-day total investment horizon Kroger Company is expected to generate 0.78 times more return on investment than Willamette Valley. However, Kroger Company is 1.28 times less risky than Willamette Valley. It trades about 0.11 of its potential returns per unit of risk. Willamette Valley Vineyards is currently generating about -0.04 per unit of risk. If you would invest 5,731 in Kroger Company on August 24, 2024 and sell it today you would earn a total of 189.50 from holding Kroger Company or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kroger Company vs. Willamette Valley Vineyards
Performance |
| Timeline |
| Kroger Company |
| Willamette Valley |
Kroger and Willamette Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kroger and Willamette Valley
The main advantage of trading using opposite Kroger and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kroger position performs unexpectedly, Willamette Valley 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 Willamette Valley will offset losses from the drop in Willamette Valley's long position.| Kroger vs. Natural Grocers by | Kroger vs. Village Super Market | Kroger vs. Ingles Markets Incorporated | Kroger vs. Ocado Group plc |
| Willamette Valley vs. Naked Wines plc | Willamette Valley vs. Pernod Ricard SA | Willamette Valley vs. Crimson Wine | Willamette Valley vs. Brown Forman |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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