Correlation Between Kroger and Caseys General

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

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

Diversification Opportunities for Kroger and Caseys General

0.54

Correlation Coefficient

Kroger  Caseys General

Very weak diversification

The 3 months correlation between Kroger and Caseys is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kroger Company and Caseys General Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caseys General Stores 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 Caseys General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caseys General Stores has no effect on the direction of Kroger i.e., Kroger and Caseys General go up and down completely randomly.

Pair Corralation between Kroger and Caseys General

Allowing for the 90-day total investment horizon Kroger is expected to generate 1.07 times less return on investment than Caseys General. In addition to that, Kroger is 1.11 times more volatile than Caseys General Stores. It trades about 0.14 of its total potential returns per unit of risk. Caseys General Stores is currently generating about 0.17 per unit of volatility. If you would invest  28,728  in Caseys General Stores on February 16, 2024 and sell it today you would earn a total of  4,665  from holding Caseys General Stores or generate 16.24% return on investment over 90 days.

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

Kroger Company  vs.  Caseys General Stores

Kroger Company

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kroger Company are ranked lower than 10 (%) 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.

Caseys General Stores

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Caseys General showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kroger and Caseys General

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

The idea behind Kroger Company and Caseys General Stores 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.