Correlation Between WK Kellogg and Compass Diversified
Can any of the company-specific risk be diversified away by investing in both WK Kellogg and Compass Diversified 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 Compass Diversified 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 Compass Diversified Holdings, you can compare the effects of market volatilities on WK Kellogg and Compass Diversified 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 Compass Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of WK Kellogg and Compass Diversified.
Diversification Opportunities for WK Kellogg and Compass Diversified
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KLG and Compass is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding WK Kellogg Co and Compass Diversified Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Diversified 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 Compass Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Diversified has no effect on the direction of WK Kellogg i.e., WK Kellogg and Compass Diversified go up and down completely randomly.
Pair Corralation between WK Kellogg and Compass Diversified
Considering the 90-day investment horizon WK Kellogg Co is expected to under-perform the Compass Diversified. In addition to that, WK Kellogg is 2.71 times more volatile than Compass Diversified Holdings. It trades about -0.42 of its total potential returns per unit of risk. Compass Diversified Holdings is currently generating about 0.19 per unit of volatility. If you would invest 2,300 in Compass Diversified Holdings on October 11, 2024 and sell it today you would earn a total of 87.00 from holding Compass Diversified Holdings or generate 3.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 95.24% |
Values | Daily Returns |
WK Kellogg Co vs. Compass Diversified Holdings
Performance |
Timeline |
WK Kellogg |
Compass Diversified |
WK Kellogg and Compass Diversified Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with WK Kellogg and Compass Diversified
The main advantage of trading using opposite WK Kellogg and Compass Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WK Kellogg position performs unexpectedly, Compass Diversified 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 Compass Diversified will offset losses from the drop in Compass Diversified's long position.WK Kellogg vs. Youdao Inc | WK Kellogg vs. Daily Journal Corp | WK Kellogg vs. Udemy Inc | WK Kellogg vs. Astral Foods Limited |
Compass Diversified vs. NH Foods Ltd | Compass Diversified vs. Village Super Market | Compass Diversified vs. WK Kellogg Co | Compass Diversified vs. National Beverage Corp |
Check out your portfolio center.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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