Correlation Between WK Kellogg and Cimpress

Can any of the company-specific risk be diversified away by investing in both WK Kellogg and Cimpress 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 Cimpress 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 Cimpress NV, you can compare the effects of market volatilities on WK Kellogg and Cimpress 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 Cimpress. Check out your portfolio center. Please also check ongoing floating volatility patterns of WK Kellogg and Cimpress.

Diversification Opportunities for WK Kellogg and Cimpress

-0.77

Correlation Coefficient

WK Kellogg  Cimpress

Pay attention - limited upside

The 3 months correlation between KLG and Cimpress is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding WK Kellogg Co and Cimpress NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cimpress NV 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 Cimpress. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cimpress NV has no effect on the direction of WK Kellogg i.e., WK Kellogg and Cimpress go up and down completely randomly.

Pair Corralation between WK Kellogg and Cimpress

Considering the 90-day investment horizon WK Kellogg Co is expected to generate 1.1 times more return on investment than Cimpress. However, WK Kellogg is 1.1 times more volatile than Cimpress NV. It trades about 0.08 of its potential returns per unit of risk. Cimpress NV is currently generating about -0.28 per unit of risk. If you would invest  1,773  in WK Kellogg Co on December 19, 2024 and sell it today you would earn a total of  227.00  from holding WK Kellogg Co or generate 12.8% return on investment over 90 days.

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

WK Kellogg Co  vs.  Cimpress NV

WK Kellogg

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WK Kellogg Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, WK Kellogg reported solid returns over the last few months and may actually be approaching a breakup point.

Cimpress NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cimpress NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with WK Kellogg and Cimpress

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

The idea behind WK Kellogg Co and Cimpress NV 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.