Correlation Between Kroger and Ingles Markets

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

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

Diversification Opportunities for Kroger and Ingles Markets

0.46

Correlation Coefficient

Kroger  Ingles Markets

Very weak diversification

The 3 months correlation between Kroger and Ingles is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Company and Ingles Markets Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingles Markets 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 Ingles Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingles Markets has no effect on the direction of Kroger i.e., Kroger and Ingles Markets go up and down completely randomly.

Pair Corralation between Kroger and Ingles Markets

Allowing for the 90-day total investment horizon Kroger Company is expected to generate 0.67 times more return on investment than Ingles Markets. However, Kroger Company is 1.48 times less risky than Ingles Markets. It trades about 0.13 of its potential returns per unit of risk. Ingles Markets Incorporated is currently generating about -0.04 per unit of risk. If you would invest  5,453  in Kroger Company on September 19, 2024 and sell it today you would earn a total of  664.00  from holding Kroger Company or generate 12.18% return on investment over 90 days.

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

Kroger Company  vs.  Ingles Markets Incorporated

Kroger Company

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kroger Company are ranked lower than 10 (%) 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 January 2025.

Ingles Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ingles Markets Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ingles Markets is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kroger and Ingles Markets

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

The idea behind Kroger Company and Ingles Markets Incorporated 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.