Correlation Between LIFENET INSURANCE and Kellogg

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

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

Diversification Opportunities for LIFENET INSURANCE and Kellogg

0.58

Correlation Coefficient

LIFENET INSURANCE  Kellogg

Very weak diversification

The 3 months correlation between LIFENET and Kellogg is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding LIFENET INSURANCE CO and Kellogg Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellogg Company and LIFENET INSURANCE 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 LIFENET INSURANCE CO are associated (or correlated) with Kellogg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kellogg Company has no effect on the direction of LIFENET INSURANCE i.e., LIFENET INSURANCE and Kellogg go up and down completely randomly.

Pair Corralation between LIFENET INSURANCE and Kellogg

Assuming the 90 days horizon LIFENET INSURANCE CO is expected to under-perform the Kellogg. In addition to that, LIFENET INSURANCE is 2.18 times more volatile than Kellogg Company. It trades about -0.03 of its total potential returns per unit of risk. Kellogg Company is currently generating about -0.02 per unit of volatility. If you would invest  7,670  in Kellogg Company on December 30, 2024 and sell it today you would lose (102.00) from holding Kellogg Company or give up 1.33% of portfolio value over 90 days.

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

LIFENET INSURANCE CO  vs.  Kellogg Company

LIFENET INSURANCE

Risk-Adjusted Performance

Very Weak

Over the last 90 days LIFENET INSURANCE CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, LIFENET INSURANCE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Kellogg Company

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kellogg Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Kellogg is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LIFENET INSURANCE and Kellogg

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

The idea behind LIFENET INSURANCE CO and Kellogg 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.