Correlation Between Stratasys and WK Kellogg

Can any of the company-specific risk be diversified away by investing in both Stratasys and WK Kellogg 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 Stratasys and WK Kellogg into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Stratasys and WK Kellogg Co, you can compare the effects of market volatilities on Stratasys and WK Kellogg 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 Stratasys with a short position of WK Kellogg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stratasys and WK Kellogg.

Diversification Opportunities for Stratasys and WK Kellogg

0.45

Correlation Coefficient

Stratasys  WK Kellogg

Very weak diversification

The 3 months correlation between Stratasys and KLG is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Stratasys and WK Kellogg Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WK Kellogg and Stratasys 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 Stratasys are associated (or correlated) with WK Kellogg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WK Kellogg has no effect on the direction of Stratasys i.e., Stratasys and WK Kellogg go up and down completely randomly.

Pair Corralation between Stratasys and WK Kellogg

Given the investment horizon of 90 days Stratasys is expected to generate 1.39 times more return on investment than WK Kellogg. However, Stratasys is 1.39 times more volatile than WK Kellogg Co. It trades about 0.16 of its potential returns per unit of risk. WK Kellogg Co is currently generating about 0.08 per unit of risk. If you would invest  646.00  in Stratasys on September 5, 2024 and sell it today you would earn a total of  294.00  from holding Stratasys or generate 45.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Stratasys  vs.  WK Kellogg Co

Stratasys

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stratasys are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Stratasys unveiled solid returns over the last few months and may actually be approaching a breakup point.

WK Kellogg

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WK Kellogg Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating essential indicators, WK Kellogg reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stratasys and WK Kellogg

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

The idea behind Stratasys and WK Kellogg 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.