Correlation Between Kroger and Walmart

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Can any of the company-specific risk be diversified away by investing in both Kroger and Walmart 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 Kroger and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kroger Co and Walmart, you can compare the effects of market volatilities on Kroger and Walmart 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 Kroger with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kroger and Walmart.

Diversification Opportunities for Kroger and Walmart

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Kroger and Walmart is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Co and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Kroger 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 Kroger Co are associated (or correlated) with Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Kroger i.e., Kroger and Walmart go up and down completely randomly.

Pair Corralation between Kroger and Walmart

Assuming the 90 days trading horizon Kroger Co is expected to generate 19.41 times more return on investment than Walmart. However, Kroger is 19.41 times more volatile than Walmart. It trades about 0.18 of its potential returns per unit of risk. Walmart is currently generating about 0.21 per unit of risk. If you would invest  5,929  in Kroger Co on September 23, 2024 and sell it today you would earn a total of  348.00  from holding Kroger Co or generate 5.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Kroger Co  vs.  Walmart

 Performance 
       Timeline  
Kroger 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Kroger Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Kroger may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Walmart 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Walmart is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Kroger and Walmart Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kroger and Walmart

The main advantage of trading using opposite Kroger and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kroger position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.
The idea behind Kroger Co and Walmart pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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