Correlation Between Walmart and Kroger
Can any of the company-specific risk be diversified away by investing in both Walmart 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 Walmart and Kroger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Kroger Company, you can compare the effects of market volatilities on Walmart 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 Walmart with a short position of Kroger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Kroger.
Diversification Opportunities for Walmart and Kroger
Almost no diversification
The 3 months correlation between Walmart and Kroger is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Kroger Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kroger Company and Walmart 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 Walmart 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 Walmart i.e., Walmart and Kroger go up and down completely randomly.
Pair Corralation between Walmart and Kroger
Considering the 90-day investment horizon Walmart is expected to generate 0.8 times more return on investment than Kroger. However, Walmart is 1.25 times less risky than Kroger. It trades about 0.13 of its potential returns per unit of risk. Kroger Company is currently generating about 0.06 per unit of risk. If you would invest 4,813 in Walmart on September 2, 2024 and sell it today you would earn a total of 4,437 from holding Walmart or generate 92.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Kroger Company
Performance |
| Timeline |
| Walmart |
| Kroger Company |
Walmart and Kroger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Kroger
The main advantage of trading using opposite Walmart and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart 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.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| Kroger vs. Grocery Outlet Holding | Kroger vs. Sprouts Farmers Market | Kroger vs. Sendas Distribuidora SA | Kroger vs. Weis Markets |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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