Correlation Between IShares Trust and Kroger

Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 IShares Trust and Kroger into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Trust and The Kroger Co, you can compare the effects of market volatilities on IShares Trust 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 IShares Trust with a short position of Kroger. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Kroger.

Diversification Opportunities for IShares Trust and Kroger

0.12

Correlation Coefficient

IShares Trust  Kroger

Average diversification

The 3 months correlation between IShares and Kroger is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and The Kroger Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Kroger and IShares Trust 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 iShares Trust 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 IShares Trust i.e., IShares Trust and Kroger go up and down completely randomly.

Pair Corralation between IShares Trust and Kroger

Assuming the 90 days trading horizon IShares Trust is expected to generate 1.2 times less return on investment than Kroger. But when comparing it to its historical volatility, iShares Trust is 1.68 times less risky than Kroger. It trades about 0.1 of its potential returns per unit of risk. The Kroger Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  32,172  in The Kroger Co on October 26, 2024 and sell it today you would earn a total of  2,962  from holding The Kroger Co or generate 9.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

iShares Trust   vs.  The Kroger Co

iShares Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IShares Trust may actually be approaching a critical reversion point that can send shares even higher in February 2025.

The Kroger

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Kroger Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Kroger may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with IShares Trust and Kroger

The main advantage of trading using opposite IShares Trust and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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.

The idea behind iShares Trust and The Kroger Co 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.