Correlation Between Krispy Kreme and Natural Grocers

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

By analyzing existing cross correlation between Krispy Kreme and Natural Grocers by, you can compare the effects of market volatilities on Krispy Kreme and Natural Grocers 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 Krispy Kreme with a short position of Natural Grocers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krispy Kreme and Natural Grocers.

Diversification Opportunities for Krispy Kreme and Natural Grocers

0.42

Correlation Coefficient

Krispy Kreme  Natural Grocers

Very weak diversification

The 3 months correlation between Krispy and Natural is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Krispy Kreme and Natural Grocers by in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Grocers by and Krispy Kreme 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 Krispy Kreme are associated (or correlated) with Natural Grocers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Grocers by has no effect on the direction of Krispy Kreme i.e., Krispy Kreme and Natural Grocers go up and down completely randomly.

Pair Corralation between Krispy Kreme and Natural Grocers

Given the investment horizon of 90 days Krispy Kreme is expected to under-perform the Natural Grocers. In addition to that, Krispy Kreme is 1.37 times more volatile than Natural Grocers by. It trades about -0.18 of its total potential returns per unit of risk. Natural Grocers by is currently generating about 0.0 per unit of volatility. If you would invest  3,958  in Natural Grocers by on December 29, 2024 and sell it today you would lose (146.00) from holding Natural Grocers by or give up 3.69% of portfolio value over 90 days.

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

Krispy Kreme  vs.  Natural Grocers by

Krispy Kreme

Risk-Adjusted Performance

Very Weak

Over the last 90 days Krispy Kreme has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Natural Grocers by

Risk-Adjusted Performance

Very Weak

Over the last 90 days Natural Grocers by has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Natural Grocers is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Krispy Kreme and Natural Grocers

The main advantage of trading using opposite Krispy Kreme and Natural Grocers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krispy Kreme position performs unexpectedly, Natural Grocers 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 Natural Grocers will offset losses from the drop in Natural Grocers' long position.

The idea behind Krispy Kreme and Natural Grocers by 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.