Correlation Between 65339KCA6 and WK Kellogg

Can any of the company-specific risk be diversified away by investing in both 65339KCA6 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 65339KCA6 and WK Kellogg into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NEE 3 15 JAN 52 and WK Kellogg Co, you can compare the effects of market volatilities on 65339KCA6 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 65339KCA6 with a short position of WK Kellogg. Check out your portfolio center. Please also check ongoing floating volatility patterns of 65339KCA6 and WK Kellogg.

Diversification Opportunities for 65339KCA6 and WK Kellogg

-0.19

Correlation Coefficient

65339KCA6  WK Kellogg

Good diversification

The 3 months correlation between 65339KCA6 and KLG is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding NEE 3 15 JAN 52 and WK Kellogg Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WK Kellogg and 65339KCA6 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 NEE 3 15 JAN 52 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 65339KCA6 i.e., 65339KCA6 and WK Kellogg go up and down completely randomly.

Pair Corralation between 65339KCA6 and WK Kellogg

Assuming the 90 days trading horizon NEE 3 15 JAN 52 is expected to generate 0.6 times more return on investment than WK Kellogg. However, NEE 3 15 JAN 52 is 1.66 times less risky than WK Kellogg. It trades about -0.1 of its potential returns per unit of risk. WK Kellogg Co is currently generating about -0.4 per unit of risk. If you would invest  6,657  in NEE 3 15 JAN 52 on October 10, 2024 and sell it today you would lose (216.00) from holding NEE 3 15 JAN 52 or give up 3.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

NEE 3 15 JAN 52  vs.  WK Kellogg Co

65339KCA6

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEE 3 15 JAN 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 65339KCA6 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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with 65339KCA6 and WK Kellogg

The main advantage of trading using opposite 65339KCA6 and WK Kellogg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 65339KCA6 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 NEE 3 15 JAN 52 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.