Correlation Between Loblaw Companies and Krispy Kreme
Can any of the company-specific risk be diversified away by investing in both Loblaw Companies and Krispy Kreme 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 Loblaw Companies and Krispy Kreme into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loblaw Companies Limited and Krispy Kreme, you can compare the effects of market volatilities on Loblaw Companies and Krispy Kreme 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 Loblaw Companies with a short position of Krispy Kreme. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loblaw Companies and Krispy Kreme.
Diversification Opportunities for Loblaw Companies and Krispy Kreme
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Loblaw and Krispy is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Loblaw Companies Limited and Krispy Kreme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krispy Kreme and Loblaw Companies 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 Loblaw Companies Limited are associated (or correlated) with Krispy Kreme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krispy Kreme has no effect on the direction of Loblaw Companies i.e., Loblaw Companies and Krispy Kreme go up and down completely randomly.
Pair Corralation between Loblaw Companies and Krispy Kreme
Assuming the 90 days horizon Loblaw Companies Limited is expected to generate 0.39 times more return on investment than Krispy Kreme. However, Loblaw Companies Limited is 2.56 times less risky than Krispy Kreme. It trades about 0.1 of its potential returns per unit of risk. Krispy Kreme is currently generating about -0.01 per unit of risk. If you would invest 8,731 in Loblaw Companies Limited on August 31, 2024 and sell it today you would earn a total of 4,138 from holding Loblaw Companies Limited or generate 47.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 86.1% |
| Values | Daily Returns |
Loblaw Companies Limited vs. Krispy Kreme
Performance |
| Timeline |
| Loblaw Companies |
| Krispy Kreme |
Loblaw Companies and Krispy Kreme Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loblaw Companies and Krispy Kreme
The main advantage of trading using opposite Loblaw Companies and Krispy Kreme positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loblaw Companies position performs unexpectedly, Krispy Kreme 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 Krispy Kreme will offset losses from the drop in Krispy Kreme's long position.| Loblaw Companies vs. Sprouts Farmers Market | Loblaw Companies vs. Kroger Company | Loblaw Companies vs. Village Super Market | Loblaw Companies vs. Weis Markets |
| Krispy Kreme vs. Sendas Distribuidora SA | Krispy Kreme vs. Natural Grocers by | Krispy Kreme vs. Sprouts Farmers Market | Krispy Kreme vs. Albertsons Companies |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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