Correlation Between WK Kellogg and BBB Foods
Can any of the company-specific risk be diversified away by investing in both WK Kellogg and BBB Foods 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 BBB Foods 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 BBB Foods, you can compare the effects of market volatilities on WK Kellogg and BBB Foods 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 BBB Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of WK Kellogg and BBB Foods.
Diversification Opportunities for WK Kellogg and BBB Foods
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KLG and BBB is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding WK Kellogg Co and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods 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 BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of WK Kellogg i.e., WK Kellogg and BBB Foods go up and down completely randomly.
Pair Corralation between WK Kellogg and BBB Foods
Considering the 90-day investment horizon WK Kellogg is expected to generate 4.53 times less return on investment than BBB Foods. In addition to that, WK Kellogg is 1.01 times more volatile than BBB Foods. It trades about 0.02 of its total potential returns per unit of risk. BBB Foods is currently generating about 0.09 per unit of volatility. If you would invest 1,750 in BBB Foods on October 27, 2024 and sell it today you would earn a total of 1,332 from holding BBB Foods or generate 76.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 72.37% |
Values | Daily Returns |
WK Kellogg Co vs. BBB Foods
Performance |
Timeline |
WK Kellogg |
BBB Foods |
WK Kellogg and BBB Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with WK Kellogg and BBB Foods
The main advantage of trading using opposite WK Kellogg and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WK Kellogg position performs unexpectedly, BBB Foods 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 BBB Foods will offset losses from the drop in BBB Foods' long position.WK Kellogg vs. World Houseware Limited | WK Kellogg vs. Penn National Gaming | WK Kellogg vs. NanoTech Gaming | WK Kellogg vs. Playstudios |
BBB Foods vs. Summit Bank Group | BBB Foods vs. Artisan Partners Asset | BBB Foods vs. Cheche Group Class | BBB Foods vs. Aldel Financial II |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |