Correlation Between Woolworths Group and Kroger
Can any of the company-specific risk be diversified away by investing in both Woolworths Group 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 Woolworths Group and Kroger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woolworths Group Limited and The Kroger Co, you can compare the effects of market volatilities on Woolworths Group 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 Woolworths Group with a short position of Kroger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woolworths Group and Kroger.
Diversification Opportunities for Woolworths Group and Kroger
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Woolworths and Kroger is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Woolworths Group Limited and The Kroger Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Kroger and Woolworths Group 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 Woolworths Group Limited 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 The Kroger has no effect on the direction of Woolworths Group i.e., Woolworths Group and Kroger go up and down completely randomly.
Pair Corralation between Woolworths Group and Kroger
Assuming the 90 days horizon Woolworths Group Limited is expected to under-perform the Kroger. But the stock apears to be less risky and, when comparing its historical volatility, Woolworths Group Limited is 1.39 times less risky than Kroger. The stock trades about -0.24 of its potential returns per unit of risk. The The Kroger Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,288 in The Kroger Co on August 25, 2024 and sell it today you would earn a total of 183.00 from holding The Kroger Co or generate 3.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woolworths Group Limited vs. The Kroger Co
Performance |
| Timeline |
| Woolworths Group |
| The Kroger |
Woolworths Group and Kroger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woolworths Group and Kroger
The main advantage of trading using opposite Woolworths Group and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woolworths Group 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.| Woolworths Group vs. DIVERSIFIED ROYALTY | Woolworths Group vs. Chuangs China Investments | Woolworths Group vs. Harmony Gold Mining | Woolworths Group vs. GREENX METALS LTD |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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