Correlation Between WK Kellogg and 0010EPAN8

Can any of the company-specific risk be diversified away by investing in both WK Kellogg and 0010EPAN8 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 0010EPAN8 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 US0010EPAN89, you can compare the effects of market volatilities on WK Kellogg and 0010EPAN8 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 0010EPAN8. Check out your portfolio center. Please also check ongoing floating volatility patterns of WK Kellogg and 0010EPAN8.

Diversification Opportunities for WK Kellogg and 0010EPAN8

0.5

Correlation Coefficient

WK Kellogg  0010EPAN8

Very weak diversification

The 3 months correlation between KLG and 0010EPAN8 is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding WK Kellogg Co and US0010EPAN89 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US0010EPAN89 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 0010EPAN8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US0010EPAN89 has no effect on the direction of WK Kellogg i.e., WK Kellogg and 0010EPAN8 go up and down completely randomly.

Pair Corralation between WK Kellogg and 0010EPAN8

Considering the 90-day investment horizon WK Kellogg Co is expected to under-perform the 0010EPAN8. In addition to that, WK Kellogg is 2.17 times more volatile than US0010EPAN89. It trades about -0.42 of its total potential returns per unit of risk. US0010EPAN89 is currently generating about -0.58 per unit of volatility. If you would invest  9,902  in US0010EPAN89 on October 12, 2024 and sell it today you would lose (219.00) from holding US0010EPAN89 or give up 2.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	15.0%
Values	Daily Returns

WK Kellogg Co  vs.  US0010EPAN89

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

US0010EPAN89

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US0010EPAN89 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Bond's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for US0010EPAN89 shareholders.

Pair Trading with WK Kellogg and 0010EPAN8

The main advantage of trading using opposite WK Kellogg and 0010EPAN8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WK Kellogg position performs unexpectedly, 0010EPAN8 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 0010EPAN8 will offset losses from the drop in 0010EPAN8's long position.

The idea behind WK Kellogg Co and US0010EPAN89 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.