Correlation Between Kroger and Seven I

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

Diversification Opportunities for Kroger and Seven I

0.78

Correlation Coefficient

Kroger  Seven I

Poor diversification

The 3 months correlation between Kroger and Seven is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding The Kroger Co and Seven i Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven i Holdings 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 Seven I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven i Holdings has no effect on the direction of Kroger i.e., Kroger and Seven I go up and down completely randomly.

Pair Corralation between Kroger and Seven I

Assuming the 90 days horizon The Kroger Co is expected to generate 1.57 times more return on investment than Seven I. However, Kroger is 1.57 times more volatile than Seven i Holdings. It trades about 0.07 of its potential returns per unit of risk. Seven i Holdings is currently generating about -0.17 per unit of risk. If you would invest  5,724  in The Kroger Co on September 24, 2024 and sell it today you would earn a total of  142.00  from holding The Kroger Co or generate 2.48% return on investment over 90 days.

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

The Kroger Co  vs.  Seven i Holdings

The Kroger

Risk-Adjusted Performance

11 of 100

Good

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

Seven i Holdings

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Seven i Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Seven I may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kroger and Seven I

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

The idea behind The Kroger Co and Seven i Holdings 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.