Correlation Between Dairy Farm and Kroger
Can any of the company-specific risk be diversified away by investing in both Dairy Farm 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 Dairy Farm and Kroger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dairy Farm International and Kroger Company, you can compare the effects of market volatilities on Dairy Farm 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 Dairy Farm with a short position of Kroger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and Kroger.
Diversification Opportunities for Dairy Farm and Kroger
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dairy and Kroger is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and Kroger Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kroger Company and Dairy Farm 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 Dairy Farm International 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 Dairy Farm i.e., Dairy Farm and Kroger go up and down completely randomly.
Pair Corralation between Dairy Farm and Kroger
Assuming the 90 days horizon Dairy Farm International is expected to generate 0.51 times more return on investment than Kroger. However, Dairy Farm International is 1.97 times less risky than Kroger. It trades about 0.22 of its potential returns per unit of risk. Kroger Company is currently generating about -0.09 per unit of risk. If you would invest 971.00 in Dairy Farm International on January 20, 2024 and sell it today you would earn a total of 25.00 from holding Dairy Farm International or generate 2.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dairy Farm International vs. Kroger Company
Performance |
| Timeline |
| Dairy Farm International |
| Kroger Company |
Dairy Farm and Kroger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and Kroger
The main advantage of trading using opposite Dairy Farm and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm 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.| Dairy Farm vs. Natural Grocers by | Dairy Farm vs. Grocery Outlet Holding | Dairy Farm vs. Village Super Market | Dairy Farm vs. Ingles Markets Incorporated |
| Kroger vs. Aquagold International | Kroger vs. Morningstar Unconstrained Allocation | Kroger vs. Thrivent High Yield | Kroger vs. Via Renewables |
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.
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