Correlation Between Reservoir Media and KROGER

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

By analyzing existing cross correlation between Reservoir Media and KROGER 75 percent, you can compare the effects of market volatilities on Reservoir Media and KROGER 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 Reservoir Media with a short position of KROGER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reservoir Media and KROGER.

Diversification Opportunities for Reservoir Media and KROGER

-0.13

Correlation Coefficient

Reservoir Media  KROGER

Good diversification

The 3 months correlation between Reservoir and KROGER is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Reservoir Media and KROGER 75 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KROGER 75 percent and Reservoir Media 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 Reservoir Media are associated (or correlated) with KROGER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KROGER 75 percent has no effect on the direction of Reservoir Media i.e., Reservoir Media and KROGER go up and down completely randomly.

Pair Corralation between Reservoir Media and KROGER

Given the investment horizon of 90 days Reservoir Media is expected to under-perform the KROGER. In addition to that, Reservoir Media is 4.0 times more volatile than KROGER 75 percent. It trades about -0.18 of its total potential returns per unit of risk. KROGER 75 percent is currently generating about 0.03 per unit of volatility. If you would invest  11,218  in KROGER 75 percent on December 30, 2024 and sell it today you would earn a total of  74.00  from holding KROGER 75 percent or generate 0.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.32%
Values	Daily Returns

Reservoir Media  vs.  KROGER 75 percent

Reservoir Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Reservoir Media has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

KROGER 75 percent

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KROGER 75 percent are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KROGER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Reservoir Media and KROGER

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

The idea behind Reservoir Media and KROGER 75 percent 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 Transaction History module to view history of all your transactions and understand their impact on performance.