Correlation Between WK Kellogg and Nates Food

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

Diversification Opportunities for WK Kellogg and Nates Food

0.0

Correlation Coefficient

WK Kellogg  Nates Food

Pay attention - limited upside

The 3 months correlation between KLG and Nates is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WK Kellogg Co and Nates Food Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nates Food 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 Nates Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nates Food has no effect on the direction of WK Kellogg i.e., WK Kellogg and Nates Food go up and down completely randomly.

Pair Corralation between WK Kellogg and Nates Food

Considering the 90-day investment horizon WK Kellogg is expected to generate 86.18 times less return on investment than Nates Food. But when comparing it to its historical volatility, WK Kellogg Co is 16.96 times less risky than Nates Food. It trades about 0.02 of its potential returns per unit of risk. Nates Food Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.04  in Nates Food Co on October 11, 2024 and sell it today you would lose (0.03) from holding Nates Food Co or give up 75.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	65.38%
Values	Daily Returns

WK Kellogg Co  vs.  Nates Food Co

WK Kellogg

Risk-Adjusted Performance

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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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Nates Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nates Food Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Nates Food is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with WK Kellogg and Nates Food

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

The idea behind WK Kellogg Co and Nates Food Co 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 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.