Correlation Between BRC and WK Kellogg

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

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

Diversification Opportunities for BRC and WK Kellogg

-0.38

Correlation Coefficient

BRC  WK Kellogg

Very good diversification

The 3 months correlation between BRC and KLG is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding BRC 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 BRC 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 BRC 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 BRC i.e., BRC and WK Kellogg go up and down completely randomly.

Pair Corralation between BRC and WK Kellogg

Given the investment horizon of 90 days BRC Inc is expected to under-perform the WK Kellogg. In addition to that, BRC is 1.04 times more volatile than WK Kellogg Co. It trades about -0.14 of its total potential returns per unit of risk. WK Kellogg Co is currently generating about 0.01 per unit of volatility. If you would invest  2,030  in WK Kellogg Co on December 16, 2024 and sell it today you would lose (18.00) from holding WK Kellogg Co or give up 0.89% of portfolio value over 90 days.

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

BRC Inc  vs.  WK Kellogg Co

BRC Inc

Risk-Adjusted Performance

Very Weak

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

WK Kellogg

Risk-Adjusted Performance

Very Weak

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

Pair Trading with BRC and WK Kellogg

The main advantage of trading using opposite BRC and WK Kellogg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRC 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 BRC 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.