Correlation Between Ingles Markets and Krispy Kreme

Can any of the company-specific risk be diversified away by investing in both Ingles Markets and Krispy Kreme 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 Krispy Kreme 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 Krispy Kreme, you can compare the effects of market volatilities on Ingles Markets and Krispy Kreme 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 Krispy Kreme. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingles Markets and Krispy Kreme.

Diversification Opportunities for Ingles Markets and Krispy Kreme

0.15

Correlation Coefficient

Ingles Markets  Krispy Kreme

Average diversification

The 3 months correlation between Ingles and Krispy is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ingles Markets Incorporated and Krispy Kreme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krispy Kreme 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 Krispy Kreme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krispy Kreme has no effect on the direction of Ingles Markets i.e., Ingles Markets and Krispy Kreme go up and down completely randomly.

Pair Corralation between Ingles Markets and Krispy Kreme

Assuming the 90 days horizon Ingles Markets Incorporated is expected to generate 1.06 times more return on investment than Krispy Kreme. However, Ingles Markets is 1.06 times more volatile than Krispy Kreme. It trades about 0.01 of its potential returns per unit of risk. Krispy Kreme is currently generating about -0.03 per unit of risk. If you would invest  7,327  in Ingles Markets Incorporated on September 4, 2024 and sell it today you would lose (36.00) from holding Ingles Markets Incorporated or give up 0.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Ingles Markets Incorporated  vs.  Krispy Kreme

Ingles Markets

Risk-Adjusted Performance

0 of 100

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.

Krispy Kreme

Risk-Adjusted Performance

0 of 100

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 comparatively stable basic indicators, Krispy Kreme is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ingles Markets and Krispy Kreme

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

The idea behind Ingles Markets Incorporated and Krispy Kreme 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.