Correlation Between WK Kellogg and Absolute Capital
Can any of the company-specific risk be diversified away by investing in both WK Kellogg and Absolute Capital 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 Absolute Capital 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 Absolute Capital Defender, you can compare the effects of market volatilities on WK Kellogg and Absolute Capital 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 Absolute Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of WK Kellogg and Absolute Capital.
Diversification Opportunities for WK Kellogg and Absolute Capital
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KLG and Absolute is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding WK Kellogg Co and Absolute Capital Defender in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Capital Defender 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 Absolute Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Capital Defender has no effect on the direction of WK Kellogg i.e., WK Kellogg and Absolute Capital go up and down completely randomly.
Pair Corralation between WK Kellogg and Absolute Capital
Considering the 90-day investment horizon WK Kellogg Co is expected to generate 8.54 times more return on investment than Absolute Capital. However, WK Kellogg is 8.54 times more volatile than Absolute Capital Defender. It trades about 0.05 of its potential returns per unit of risk. Absolute Capital Defender is currently generating about 0.11 per unit of risk. If you would invest 1,658 in WK Kellogg Co on February 23, 2024 and sell it today you would earn a total of 349.00 from holding WK Kellogg Co or generate 21.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 66.67% |
Values | Daily Returns |
WK Kellogg Co vs. Absolute Capital Defender
Performance |
Timeline |
WK Kellogg |
Absolute Capital Defender |
WK Kellogg and Absolute Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with WK Kellogg and Absolute Capital
The main advantage of trading using opposite WK Kellogg and Absolute Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WK Kellogg position performs unexpectedly, Absolute Capital 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 Absolute Capital will offset losses from the drop in Absolute Capital's long position.WK Kellogg vs. Smart for Life | WK Kellogg vs. McCormick Company Incorporated | WK Kellogg vs. Bon Natural Life |
Absolute Capital vs. Pimco All Asset | Absolute Capital vs. All Asset Fund | Absolute Capital vs. Pimco All Asset | Absolute Capital vs. Pimco All Asset |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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