Correlation Between KRISPY KREME and Cboe Global

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

By analyzing existing cross correlation between KRISPY KREME DL 01 and Cboe Global Markets, you can compare the effects of market volatilities on KRISPY KREME and Cboe Global 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 KRISPY KREME with a short position of Cboe Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRISPY KREME and Cboe Global.

Diversification Opportunities for KRISPY KREME and Cboe Global

0.21

Correlation Coefficient

KRISPY KREME  Cboe Global

Modest diversification

The 3 months correlation between KRISPY and Cboe is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding KRISPY KREME DL 01 and Cboe Global Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cboe Global Markets and KRISPY KREME 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 KRISPY KREME DL 01 are associated (or correlated) with Cboe Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cboe Global Markets has no effect on the direction of KRISPY KREME i.e., KRISPY KREME and Cboe Global go up and down completely randomly.

Pair Corralation between KRISPY KREME and Cboe Global

Assuming the 90 days horizon KRISPY KREME DL 01 is expected to under-perform the Cboe Global. In addition to that, KRISPY KREME is 1.53 times more volatile than Cboe Global Markets. It trades about -0.1 of its total potential returns per unit of risk. Cboe Global Markets is currently generating about 0.0 per unit of volatility. If you would invest  18,893  in Cboe Global Markets on September 19, 2024 and sell it today you would lose (93.00) from holding Cboe Global Markets or give up 0.49% of portfolio value over 90 days.

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

KRISPY KREME DL 01  vs.  Cboe Global Markets

KRISPY KREME DL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KRISPY KREME DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Cboe Global Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cboe Global Markets has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Cboe Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KRISPY KREME and Cboe Global

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

The idea behind KRISPY KREME DL 01 and Cboe Global Markets 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.