Correlation Between WK Kellogg and Chart Industries

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

Diversification Opportunities for WK Kellogg and Chart Industries

0.34

Correlation Coefficient

WK Kellogg  Chart Industries

Weak diversification

The 3 months correlation between KLG and Chart is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding WK Kellogg Co and Chart Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chart Industries 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 Chart Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chart Industries has no effect on the direction of WK Kellogg i.e., WK Kellogg and Chart Industries go up and down completely randomly.

Pair Corralation between WK Kellogg and Chart Industries

Considering the 90-day investment horizon WK Kellogg Co is expected to under-perform the Chart Industries. In addition to that, WK Kellogg is 1.17 times more volatile than Chart Industries. It trades about -0.08 of its total potential returns per unit of risk. Chart Industries is currently generating about 0.32 per unit of volatility. If you would invest  7,000  in Chart Industries on October 23, 2024 and sell it today you would earn a total of  1,008  from holding Chart Industries or generate 14.4% return on investment over 90 days.

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

WK Kellogg Co  vs.  Chart Industries

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.

Chart Industries

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chart Industries are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Chart Industries sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WK Kellogg and Chart Industries

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

The idea behind WK Kellogg Co and Chart Industries 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.