Correlation Between Kroger and Village Super

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

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

Diversification Opportunities for Kroger and Village Super

0.56

Correlation Coefficient

Kroger  Village Super

Very weak diversification

The 3 months correlation between Kroger and Village is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Company and Village Super Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Village Super Market 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 Village Super. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Village Super Market has no effect on the direction of Kroger i.e., Kroger and Village Super go up and down completely randomly.

Pair Corralation between Kroger and Village Super

Allowing for the 90-day total investment horizon Kroger Company is expected to generate 0.58 times more return on investment than Village Super. However, Kroger Company is 1.72 times less risky than Village Super. It trades about 0.13 of its potential returns per unit of risk. Village Super Market is currently generating about 0.01 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.  Village Super Market

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.

Village Super Market

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Village Super Market are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Village Super is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kroger and Village Super

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

The idea behind Kroger Company and Village Super Market 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 Global Correlations module to find global opportunities by holding instruments from different markets.