Correlation Between Ocado Group and Kroger

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

By analyzing existing cross correlation between Ocado Group plc and Kroger Company, you can compare the effects of market volatilities on Ocado Group and Kroger 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 Ocado Group with a short position of Kroger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ocado Group and Kroger.

Diversification Opportunities for Ocado Group and Kroger

-0.83

Correlation Coefficient

Ocado Group  Kroger

Pay attention - limited upside

The 3 months correlation between Ocado and Kroger is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ocado Group plc and Kroger Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kroger Company and Ocado Group 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 Ocado Group plc are associated (or correlated) with Kroger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kroger Company has no effect on the direction of Ocado Group i.e., Ocado Group and Kroger go up and down completely randomly.

Pair Corralation between Ocado Group and Kroger

Assuming the 90 days horizon Ocado Group plc is expected to under-perform the Kroger. In addition to that, Ocado Group is 1.65 times more volatile than Kroger Company. It trades about -0.13 of its total potential returns per unit of risk. Kroger Company is currently generating about 0.09 per unit of volatility. If you would invest  5,629  in Kroger Company on September 25, 2024 and sell it today you would earn a total of  467.00  from holding Kroger Company or generate 8.3% return on investment over 90 days.

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

Ocado Group plc  vs.  Kroger Company

Ocado Group plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocado Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Kroger Company

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kroger Company are ranked lower than 7 (%) 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.

Pair Trading with Ocado Group and Kroger

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

The idea behind Ocado Group plc and Kroger Company 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.