Correlation Between Daily Journal and WK Kellogg

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

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

Diversification Opportunities for Daily Journal and WK Kellogg

0.63

Correlation Coefficient

Daily Journal  WK Kellogg

Poor diversification

The 3 months correlation between Daily and KLG is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Daily Journal Corp and WK Kellogg Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WK Kellogg and Daily Journal 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 Daily Journal Corp 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 Daily Journal i.e., Daily Journal and WK Kellogg go up and down completely randomly.

Pair Corralation between Daily Journal and WK Kellogg

Given the investment horizon of 90 days Daily Journal Corp is expected to under-perform the WK Kellogg. But the stock apears to be less risky and, when comparing its historical volatility, Daily Journal Corp is 1.18 times less risky than WK Kellogg. The stock trades about -0.04 of its potential returns per unit of risk. The WK Kellogg Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,723  in WK Kellogg Co on October 26, 2024 and sell it today you would lose (27.00) from holding WK Kellogg Co or give up 1.57% of portfolio value over 90 days.

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

Daily Journal Corp  vs.  WK Kellogg Co

Daily Journal Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daily Journal Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

WK Kellogg

Risk-Adjusted Performance

0 of 100

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Daily Journal and WK Kellogg

The main advantage of trading using opposite Daily Journal and WK Kellogg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daily Journal 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 Daily Journal Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.