KROGER CO significantly underperformed on Monday. It returned -2.13% to close at 28.92. On a day when the overall market breadth was 34%, it closed higher than 10% of the market. In comparison, the benchmark SP500 index closed today at -0.0191%.
KR showed a flat trend over the last 3 months. During this period KR returned +0.14% and saw a maximum drawdown of -10.12%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in KR till volatility reduces and a clear trend emerges.
During the last three months KR was mostly profitable and delivered on average +0.02% per day. It's best return during this period (of +6.59%) was on Tuesday, 30 Oct, 2018. While it's worst loss in the same period (of -4.87%) was on Tuesday, 9 Oct, 2018. There was initially a bearish trend during this period which started on 9 Oct, 2018 and went on till 12 Oct, 2018. The trend delivered -8.49% losses to investors. This was followed by a bullish trend that started on 2 Nov, 2018 and ended on 9 Nov, 2018. This bullish trend delivered +6.86% to investors.
On monthly basis, KR delivered profits and losses in equal number of months. KR delivered profits less regularly than SP500 index. KR significantly outperformed SP500 index in Jun 2018, when it returned +16.93% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. KR had a shorter streak of profitable months than SP500 index. It only went up in 3 straight months during the last year. It is interesting to note that both KR and SP500 index significantly outperform during months when quarterly/annual results are announced.
How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.
-- Robert G. Allen
KR is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant fall in KR's volatility from 19 Sep, 2018 to 3 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that KR has significant positive skewness in it's return distribution. This indicates that investors can expect KR to recover from drawdowns quickly. Which makes KR a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
Investors trading in KR derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.
Based on your interest in KR you may find it interesting to know that LULU is a mid cap that has shown remarkable performance and deserves to be on every investors' watchlist.
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