Correlation Between Kroger and Koninklijke Ahold

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

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

Diversification Opportunities for Kroger and Koninklijke Ahold

0.08

Correlation Coefficient

Kroger  Koninklijke Ahold

Significant diversification

The 3 months correlation between Kroger and Koninklijke is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Company and Koninklijke Ahold Delhaize in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koninklijke Ahold 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 Kroger Company 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 Kroger i.e., Kroger and Koninklijke Ahold go up and down completely randomly.

Pair Corralation between Kroger and Koninklijke Ahold

If you would invest  4,980  in Kroger Company on September 12, 2024 and sell it today you would earn a total of  1,093  from holding Kroger Company or generate 21.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.8%
Values	Daily Returns

Kroger Company  vs.  Koninklijke Ahold Delhaize

Kroger Company

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kroger Company are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Kroger may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Koninklijke Ahold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Koninklijke Ahold Delhaize has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Koninklijke Ahold is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kroger and Koninklijke Ahold

The main advantage of trading using opposite Kroger and Koninklijke Ahold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kroger 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 Kroger Company 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .