Correlation Between Ingles Markets and Koninklijke Ahold

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

By analyzing existing cross correlation between Ingles Markets Incorporated and Koninklijke Ahold Delhaize, you can compare the effects of market volatilities on Ingles Markets and Koninklijke Ahold 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 Ingles Markets with a short position of Koninklijke Ahold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingles Markets and Koninklijke Ahold.

Diversification Opportunities for Ingles Markets and Koninklijke Ahold

-0.37

Correlation Coefficient

Ingles Markets  Koninklijke Ahold

Very good diversification

The 3 months correlation between Ingles and Koninklijke is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ingles Markets Incorporated and Koninklijke Ahold Delhaize in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Ahold and Ingles Markets 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 Ingles Markets Incorporated are associated (or correlated) with Koninklijke Ahold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koninklijke Ahold has no effect on the direction of Ingles Markets i.e., Ingles Markets and Koninklijke Ahold go up and down completely randomly.

Pair Corralation between Ingles Markets and Koninklijke Ahold

Assuming the 90 days horizon Ingles Markets is expected to generate 13.73 times less return on investment than Koninklijke Ahold. But when comparing it to its historical volatility, Ingles Markets Incorporated is 1.43 times less risky than Koninklijke Ahold. It trades about 0.01 of its potential returns per unit of risk. Koninklijke Ahold Delhaize is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,269  in Koninklijke Ahold Delhaize on December 30, 2024 and sell it today you would earn a total of  469.00  from holding Koninklijke Ahold Delhaize or generate 14.35% return on investment over 90 days.

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

Ingles Markets Incorporated  vs.  Koninklijke Ahold Delhaize

Ingles Markets

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ingles Markets Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ingles Markets is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Koninklijke Ahold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Koninklijke Ahold Delhaize are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental indicators, Koninklijke Ahold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ingles Markets and Koninklijke Ahold

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

The idea behind Ingles Markets Incorporated and Koninklijke Ahold Delhaize 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.