Correlation Between Sysco and WK Kellogg

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

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

Diversification Opportunities for Sysco and WK Kellogg

0.8

Correlation Coefficient

Sysco  WK Kellogg

Very poor diversification

The 3 months correlation between Sysco and KLG is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sysco and WK Kellogg Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WK Kellogg and Sysco 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 Sysco 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 Sysco i.e., Sysco and WK Kellogg go up and down completely randomly.

Pair Corralation between Sysco and WK Kellogg

Considering the 90-day investment horizon Sysco is expected to generate 1.27 times less return on investment than WK Kellogg. But when comparing it to its historical volatility, Sysco is 2.72 times less risky than WK Kellogg. It trades about 0.03 of its potential returns per unit of risk. WK Kellogg Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,702  in WK Kellogg Co on October 26, 2024 and sell it today you would lose (14.00) from holding WK Kellogg Co or give up 0.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Sysco  vs.  WK Kellogg Co

Sysco

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Sysco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Sysco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

WK Kellogg

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Sysco and WK Kellogg

The main advantage of trading using opposite Sysco and WK Kellogg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sysco 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 Sysco 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.