Correlation Between Kroger and Cable One

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

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

Diversification Opportunities for Kroger and Cable One

-0.39

Correlation Coefficient

Kroger  Cable One

Very good diversification

The 3 months correlation between Kroger and Cable is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding The Kroger Co and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One and Kroger 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 The Kroger Co are associated (or correlated) with Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of Kroger i.e., Kroger and Cable One go up and down completely randomly.

Pair Corralation between Kroger and Cable One

Assuming the 90 days trading horizon The Kroger Co is expected to generate 0.47 times more return on investment than Cable One. However, The Kroger Co is 2.11 times less risky than Cable One. It trades about 0.0 of its potential returns per unit of risk. Cable One is currently generating about -0.17 per unit of risk. If you would invest  37,835  in The Kroger Co on December 23, 2024 and sell it today you would lose (576.00) from holding The Kroger Co or give up 1.52% of portfolio value over 90 days.

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

The Kroger Co  vs.  Cable One

The Kroger

Risk-Adjusted Performance

Very Weak

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

Cable One

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cable One has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kroger and Cable One

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

The idea behind The Kroger Co and Cable One 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.