Correlation Between Weis Markets and Kroger

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

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

Diversification Opportunities for Weis Markets and Kroger

0.75

Correlation Coefficient

Weis Markets  Kroger

Poor diversification

The 3 months correlation between Weis and Kroger is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Weis Markets and Kroger Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kroger Company and Weis Markets 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 Weis Markets 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 Weis Markets i.e., Weis Markets and Kroger go up and down completely randomly.

Pair Corralation between Weis Markets and Kroger

Considering the 90-day investment horizon Weis Markets is expected to under-perform the Kroger. But the stock apears to be less risky and, when comparing its historical volatility, Weis Markets is 1.75 times less risky than Kroger. The stock trades about -0.28 of its potential returns per unit of risk. The Kroger Company is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  6,057  in Kroger Company on September 27, 2024 and sell it today you would earn a total of  219.00  from holding Kroger Company or generate 3.62% return on investment over 90 days.

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

Weis Markets  vs.  Kroger Company

Weis Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Weis Markets has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Weis Markets is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional 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 unfluctuating basic indicators, Kroger may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Weis Markets and Kroger

The main advantage of trading using opposite Weis Markets and Kroger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weis Markets 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 Weis Markets 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.