Correlation Between BCE and WK Kellogg

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

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

Diversification Opportunities for BCE and WK Kellogg

-0.5

Correlation Coefficient

BCE  WK Kellogg

Very good diversification

The 3 months correlation between BCE and KLG is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding BCE Inc and WK Kellogg Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WK Kellogg and BCE 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 BCE Inc are associated (or correlated) with WK Kellogg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WK Kellogg has no effect on the direction of BCE i.e., BCE and WK Kellogg go up and down completely randomly.

Pair Corralation between BCE and WK Kellogg

Considering the 90-day investment horizon BCE Inc is expected to generate 0.59 times more return on investment than WK Kellogg. However, BCE Inc is 1.71 times less risky than WK Kellogg. It trades about -0.31 of its potential returns per unit of risk. WK Kellogg Co is currently generating about -0.32 per unit of risk. If you would invest  2,615  in BCE Inc on October 8, 2024 and sell it today you would lose (221.00) from holding BCE Inc or give up 8.45% of portfolio value over 90 days.

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

BCE Inc  vs.  WK Kellogg Co

BCE Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCE Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

WK Kellogg

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WK Kellogg Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, WK Kellogg may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BCE and WK Kellogg

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

The idea behind BCE Inc and WK Kellogg Co 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.