Correlation Between Tesco PLC and Krispy Kreme
Can any of the company-specific risk be diversified away by investing in both Tesco PLC and Krispy Kreme 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 Tesco PLC and Krispy Kreme into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesco PLC and Krispy Kreme, you can compare the effects of market volatilities on Tesco PLC and Krispy Kreme 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 Tesco PLC with a short position of Krispy Kreme. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesco PLC and Krispy Kreme.
Diversification Opportunities for Tesco PLC and Krispy Kreme
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tesco and Krispy is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Tesco PLC and Krispy Kreme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krispy Kreme and Tesco PLC 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 Tesco PLC are associated (or correlated) with Krispy Kreme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krispy Kreme has no effect on the direction of Tesco PLC i.e., Tesco PLC and Krispy Kreme go up and down completely randomly.
Pair Corralation between Tesco PLC and Krispy Kreme
Assuming the 90 days horizon Tesco PLC is expected to generate 0.65 times more return on investment than Krispy Kreme. However, Tesco PLC is 1.54 times less risky than Krispy Kreme. It trades about 0.02 of its potential returns per unit of risk. Krispy Kreme is currently generating about -0.21 per unit of risk. If you would invest 469.00 in Tesco PLC on November 30, 2024 and sell it today you would earn a total of 6.00 from holding Tesco PLC or generate 1.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.33% |
Values | Daily Returns |
Tesco PLC vs. Krispy Kreme
Performance |
Timeline |
Tesco PLC |
Krispy Kreme |
Tesco PLC and Krispy Kreme Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tesco PLC and Krispy Kreme
The main advantage of trading using opposite Tesco PLC and Krispy Kreme positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesco PLC position performs unexpectedly, Krispy Kreme 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 Krispy Kreme will offset losses from the drop in Krispy Kreme's long position.Tesco PLC vs. Ocado Group PLC | Tesco PLC vs. Carrefour SA PK | Tesco PLC vs. J Sainsbury PLC | Tesco PLC vs. Tesco PLC |
Krispy Kreme vs. Natural Grocers by | Krispy Kreme vs. Sprouts Farmers Market | Krispy Kreme vs. Albertsons Companies | Krispy Kreme vs. Ingles Markets Incorporated |
Check out your portfolio center.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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Global Correlations Find global opportunities by holding instruments from different markets | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |