Correlation Between NYSE Composite and Kroger
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Kroger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Kroger Company, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Kroger. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Kroger.
Diversification Opportunities for NYSE Composite and Kroger
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Kroger is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Kroger Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kroger Company and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Kroger go up and down completely randomly.
Pair Corralation between NYSE Composite and Kroger
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.79 times less return on investment than Kroger. But when comparing it to its historical volatility, NYSE Composite is 2.11 times less risky than Kroger. It trades about 0.13 of its potential returns per unit of risk. Kroger Company is currently generating about 0.11 of returns per unit of risk over similar time horizon. 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 Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Kroger Company
Performance |
| Timeline |
NYSE Composite and Kroger Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Kroger Company
Pair trading matchups for Kroger
Pair Trading with NYSE Composite and Kroger
The main advantage of trading using opposite NYSE Composite and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Awilco Drilling PLC | NYSE Composite vs. AKITA Drilling | NYSE Composite vs. SunOpta | NYSE Composite vs. Delek Drilling |
| Kroger vs. Natural Grocers by | Kroger vs. Village Super Market | Kroger vs. Ingles Markets Incorporated | Kroger vs. Ocado Group plc |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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