Correlation Between Sprouts Farmers and Kroger
Can any of the company-specific risk be diversified away by investing in both Sprouts Farmers 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 Sprouts Farmers and Kroger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprouts Farmers Market and Kroger Company, you can compare the effects of market volatilities on Sprouts Farmers 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 Sprouts Farmers with a short position of Kroger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprouts Farmers and Kroger.
Diversification Opportunities for Sprouts Farmers and Kroger
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sprouts and Kroger is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sprouts Farmers Market and Kroger Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kroger Company and Sprouts Farmers 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 Sprouts Farmers Market 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 Sprouts Farmers i.e., Sprouts Farmers and Kroger go up and down completely randomly.
Pair Corralation between Sprouts Farmers and Kroger
Considering the 90-day investment horizon Sprouts Farmers Market is expected to generate 1.55 times more return on investment than Kroger. However, Sprouts Farmers is 1.55 times more volatile than Kroger Company. It trades about 0.44 of its potential returns per unit of risk. Kroger Company is currently generating about 0.11 per unit of risk. If you would invest 11,885 in Sprouts Farmers Market on August 24, 2024 and sell it today you would earn a total of 2,735 from holding Sprouts Farmers Market or generate 23.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprouts Farmers Market vs. Kroger Company
Performance |
| Timeline |
| Sprouts Farmers Market |
| Kroger Company |
Sprouts Farmers and Kroger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprouts Farmers and Kroger
The main advantage of trading using opposite Sprouts Farmers and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprouts Farmers 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.| Sprouts Farmers vs. Natural Grocers by | Sprouts Farmers vs. Village Super Market | Sprouts Farmers vs. Ingles Markets Incorporated | Sprouts Farmers vs. Ocado Group plc |
| 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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