Correlation Between WK Kellogg and American Vanguard

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

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

Diversification Opportunities for WK Kellogg and American Vanguard

-0.19

Correlation Coefficient

WK Kellogg  American Vanguard

Good diversification

The 3 months correlation between KLG and American is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding WK Kellogg Co and American Vanguard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Vanguard and WK Kellogg 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 WK Kellogg Co are associated (or correlated) with American Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Vanguard has no effect on the direction of WK Kellogg i.e., WK Kellogg and American Vanguard go up and down completely randomly.

Pair Corralation between WK Kellogg and American Vanguard

Considering the 90-day investment horizon WK Kellogg is expected to generate 1.56 times less return on investment than American Vanguard. But when comparing it to its historical volatility, WK Kellogg Co is 1.03 times less risky than American Vanguard. It trades about 0.02 of its potential returns per unit of risk. American Vanguard is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  459.00  in American Vanguard on December 17, 2024 and sell it today you would earn a total of  14.00  from holding American Vanguard or generate 3.05% return on investment over 90 days.

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

WK Kellogg Co  vs.  American Vanguard

WK Kellogg

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WK Kellogg Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, WK Kellogg is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

American Vanguard

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Vanguard are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, American Vanguard may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with WK Kellogg and American Vanguard

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

The idea behind WK Kellogg Co and American Vanguard 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.