Correlation Between Kroger and Bon Natural

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

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

Diversification Opportunities for Kroger and Bon Natural

-0.87

Correlation Coefficient

Kroger  Bon Natural

Pay attention - limited upside

The 3 months correlation between Kroger and Bon is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Company and Bon Natural Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bon Natural Life 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 Bon Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bon Natural Life has no effect on the direction of Kroger i.e., Kroger and Bon Natural go up and down completely randomly.

Pair Corralation between Kroger and Bon Natural

Allowing for the 90-day total investment horizon Kroger Company is expected to generate 0.25 times more return on investment than Bon Natural. However, Kroger Company is 4.08 times less risky than Bon Natural. It trades about 0.02 of its potential returns per unit of risk. Bon Natural Life is currently generating about -0.04 per unit of risk. If you would invest  5,195  in Kroger Company on January 31, 2024 and sell it today you would earn a total of  362.00  from holding Kroger Company or generate 6.97% return on investment over 90 days.

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

Kroger Company  vs.  Bon Natural Life

Kroger Company

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kroger Company are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Kroger reported solid returns over the last few months and may actually be approaching a breakup point.

Bon Natural Life

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bon Natural Life has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Bon Natural is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Kroger and Bon Natural

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

The idea behind Kroger Company and Bon Natural Life 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.