Correlation Between Cable One and Kroger

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

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

Diversification Opportunities for Cable One and Kroger

0.44

Correlation Coefficient

Cable One  Kroger

Very weak diversification

The 3 months correlation between Cable and Kroger is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and The Kroger Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Kroger and Cable One 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 Cable One 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 Cable One i.e., Cable One and Kroger go up and down completely randomly.

Pair Corralation between Cable One and Kroger

Assuming the 90 days trading horizon Cable One is expected to under-perform the Kroger. But the stock apears to be less risky and, when comparing its historical volatility, Cable One is 2.76 times less risky than Kroger. The stock trades about -0.38 of its potential returns per unit of risk. The The Kroger Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  32,571  in The Kroger Co on October 11, 2024 and sell it today you would earn a total of  3,609  from holding The Kroger Co or generate 11.08% return on investment over 90 days.

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

Cable One  vs.  The Kroger Co

Cable One

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cable One are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cable One sustained solid returns over the last few months and may actually be approaching a breakup point.

The Kroger

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Kroger Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Kroger sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cable One and Kroger

The main advantage of trading using opposite Cable One and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cable One 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 Cable One 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.