Correlation Between Kroger and Consumer Products

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

By analyzing existing cross correlation between Kroger Company and Consumer Products Fund, you can compare the effects of market volatilities on Kroger and Consumer Products 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 Consumer Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kroger and Consumer Products.

Diversification Opportunities for Kroger and Consumer Products

0.65

Correlation Coefficient

Kroger  Consumer Products

Poor diversification

The 3 months correlation between Kroger and Consumer is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Company and Consumer Products Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Products 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 Consumer Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Products has no effect on the direction of Kroger i.e., Kroger and Consumer Products go up and down completely randomly.

Pair Corralation between Kroger and Consumer Products

Allowing for the 90-day total investment horizon Kroger Company is expected to generate 1.58 times more return on investment than Consumer Products. However, Kroger is 1.58 times more volatile than Consumer Products Fund. It trades about 0.1 of its potential returns per unit of risk. Consumer Products Fund is currently generating about 0.06 per unit of risk. If you would invest  6,093  in Kroger Company on December 29, 2024 and sell it today you would earn a total of  521.00  from holding Kroger Company or generate 8.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Kroger Company  vs.  Consumer Products Fund

Kroger Company

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kroger Company are ranked lower than 7 (%) 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 April 2025.

Consumer Products

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Consumer Products Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Consumer Products is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kroger and Consumer Products

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

The idea behind Kroger Company and Consumer Products Fund 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.