Correlation Between Natural Grocers and Kroger
Can any of the company-specific risk be diversified away by investing in both Natural Grocers and Kroger 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 Natural Grocers and Kroger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Grocers by and Kroger Company, you can compare the effects of market volatilities on Natural Grocers and Kroger 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 Natural Grocers with a short position of Kroger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Grocers and Kroger.
Diversification Opportunities for Natural Grocers and Kroger
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Natural and Kroger is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Natural Grocers by and Kroger Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kroger Company and Natural Grocers 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 Natural Grocers by are associated (or correlated) with Kroger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kroger Company has no effect on the direction of Natural Grocers i.e., Natural Grocers and Kroger go up and down completely randomly.
Pair Corralation between Natural Grocers and Kroger
Given the investment horizon of 90 days Natural Grocers by is expected to generate 4.47 times more return on investment than Kroger. However, Natural Grocers is 4.47 times more volatile than Kroger Company. It trades about 0.46 of its potential returns per unit of risk. Kroger Company is currently generating about 0.2 per unit of risk. If you would invest 2,720 in Natural Grocers by on August 28, 2024 and sell it today you would earn a total of 1,978 from holding Natural Grocers by or generate 72.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Grocers by vs. Kroger Company
Performance |
| Timeline |
| Natural Grocers by |
| Kroger Company |
Natural Grocers and Kroger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Grocers and Kroger
The main advantage of trading using opposite Natural Grocers and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Grocers position performs unexpectedly, Kroger 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 Kroger will offset losses from the drop in Kroger's long position.| Natural Grocers vs. Innovative Food Hldg | Natural Grocers vs. Calavo Growers | Natural Grocers vs. The Chefs Warehouse | Natural Grocers vs. AMCON Distributing |
| Kroger vs. Innovative Food Hldg | Kroger vs. Calavo Growers | Kroger vs. The Chefs Warehouse | Kroger vs. AMCON Distributing |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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