Correlation Between Kroger and AHOLD DELHAIADR16

Can any of the company-specific risk be diversified away by investing in both Kroger and AHOLD DELHAIADR16 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 AHOLD DELHAIADR16 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Kroger Co and AHOLD DELHAIADR16 EO 25, you can compare the effects of market volatilities on Kroger and AHOLD DELHAIADR16 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 AHOLD DELHAIADR16. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kroger and AHOLD DELHAIADR16.

Diversification Opportunities for Kroger and AHOLD DELHAIADR16

0.68

Correlation Coefficient

Kroger  AHOLD DELHAIADR16

Poor diversification

The 3 months correlation between Kroger and AHOLD is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding The Kroger Co and AHOLD DELHAIADR16 EO 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AHOLD DELHAIADR16 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 The Kroger Co are associated (or correlated) with AHOLD DELHAIADR16. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AHOLD DELHAIADR16 has no effect on the direction of Kroger i.e., Kroger and AHOLD DELHAIADR16 go up and down completely randomly.

Pair Corralation between Kroger and AHOLD DELHAIADR16

Assuming the 90 days horizon The Kroger Co is expected to generate 0.96 times more return on investment than AHOLD DELHAIADR16. However, The Kroger Co is 1.04 times less risky than AHOLD DELHAIADR16. It trades about 0.1 of its potential returns per unit of risk. AHOLD DELHAIADR16 EO 25 is currently generating about 0.07 per unit of risk. If you would invest  4,012  in The Kroger Co on September 5, 2024 and sell it today you would earn a total of  1,735  from holding The Kroger Co or generate 43.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

The Kroger Co  vs.  AHOLD DELHAIADR16 EO 25

The Kroger

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Kroger Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kroger reported solid returns over the last few months and may actually be approaching a breakup point.

AHOLD DELHAIADR16

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AHOLD DELHAIADR16 EO 25 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AHOLD DELHAIADR16 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Kroger and AHOLD DELHAIADR16

The main advantage of trading using opposite Kroger and AHOLD DELHAIADR16 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kroger position performs unexpectedly, AHOLD DELHAIADR16 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 AHOLD DELHAIADR16 will offset losses from the drop in AHOLD DELHAIADR16's long position.

The idea behind The Kroger Co and AHOLD DELHAIADR16 EO 25 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 Commodity Directory module to find actively traded commodities issued by global exchanges.