Correlation Between WK Kellogg and Fluent

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

Diversification Opportunities for WK Kellogg and Fluent

-0.37

Correlation Coefficient

WK Kellogg  Fluent

Very good diversification

The 3 months correlation between KLG and Fluent is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding WK Kellogg Co and Fluent Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluent Inc 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 Fluent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluent Inc has no effect on the direction of WK Kellogg i.e., WK Kellogg and Fluent go up and down completely randomly.

Pair Corralation between WK Kellogg and Fluent

Considering the 90-day investment horizon WK Kellogg Co is expected to generate 0.64 times more return on investment than Fluent. However, WK Kellogg Co is 1.56 times less risky than Fluent. It trades about 0.02 of its potential returns per unit of risk. Fluent Inc is currently generating about -0.02 per unit of risk. If you would invest  1,616  in WK Kellogg Co on October 25, 2024 and sell it today you would earn a total of  70.00  from holding WK Kellogg Co or generate 4.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	67.14%
Values	Daily Returns

WK Kellogg Co  vs.  Fluent Inc

WK Kellogg

Risk-Adjusted Performance

1 of 100

Very 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.

Fluent Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fluent Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fluent is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WK Kellogg and Fluent

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

The idea behind WK Kellogg Co and Fluent Inc 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.