Correlation Between Calavo Growers and Kroger

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

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

Diversification Opportunities for Calavo Growers and Kroger

-0.33

Correlation Coefficient

Calavo Growers  Kroger

Very good diversification

The 3 months correlation between Calavo and Kroger is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Calavo Growers and Kroger Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kroger Company and Calavo Growers 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 Calavo Growers 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 Calavo Growers i.e., Calavo Growers and Kroger go up and down completely randomly.

Pair Corralation between Calavo Growers and Kroger

Given the investment horizon of 90 days Calavo Growers is expected to under-perform the Kroger. In addition to that, Calavo Growers is 1.29 times more volatile than Kroger Company. It trades about -0.01 of its total potential returns per unit of risk. Kroger Company is currently generating about 0.13 per unit of volatility. If you would invest  4,775  in Kroger Company on February 19, 2024 and sell it today you would earn a total of  645.00  from holding Kroger Company or generate 13.51% return on investment over 90 days.

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

Calavo Growers  vs.  Kroger Company

Calavo Growers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calavo Growers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Calavo Growers is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Kroger Company

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kroger Company are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Kroger reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Calavo Growers and Kroger

The main advantage of trading using opposite Calavo Growers and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calavo Growers 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 Calavo Growers 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.