Correlation Between WK Kellogg and Hawkins

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

Diversification Opportunities for WK Kellogg and Hawkins

0.86

Correlation Coefficient

WK Kellogg  Hawkins

Very poor diversification

The 3 months correlation between KLG and Hawkins is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding WK Kellogg Co and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of WK Kellogg i.e., WK Kellogg and Hawkins go up and down completely randomly.

Pair Corralation between WK Kellogg and Hawkins

Considering the 90-day investment horizon WK Kellogg is expected to generate 3.91 times less return on investment than Hawkins. In addition to that, WK Kellogg is 1.28 times more volatile than Hawkins. It trades about 0.02 of its total potential returns per unit of risk. Hawkins is currently generating about 0.1 per unit of volatility. If you would invest  4,036  in Hawkins on October 27, 2024 and sell it today you would earn a total of  7,532  from holding Hawkins or generate 186.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	67.41%
Values	Daily Returns

WK Kellogg Co  vs.  Hawkins

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.

Hawkins

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hawkins has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, Hawkins is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with WK Kellogg and Hawkins

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

The idea behind WK Kellogg Co and Hawkins 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .