Correlation Between J J and WK Kellogg

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

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

Diversification Opportunities for J J and WK Kellogg

-0.52

Correlation Coefficient

J J  WK Kellogg

Excellent diversification

The 3 months correlation between JJSF and KLG is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding J J Snack and WK Kellogg Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WK Kellogg and J J 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 J J Snack 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 J J i.e., J J and WK Kellogg go up and down completely randomly.

Pair Corralation between J J and WK Kellogg

Given the investment horizon of 90 days J J is expected to generate 1.08 times less return on investment than WK Kellogg. But when comparing it to its historical volatility, J J Snack is 1.92 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 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,644  in WK Kellogg Co on March 28, 2024 and sell it today you would earn a total of  24.00  from holding WK Kellogg Co or generate 1.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	37.9%
Values	Daily Returns

J J Snack  vs.  WK Kellogg Co

J J Snack

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in J J Snack are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, J J reported solid returns over the last few months and may actually be approaching a breakup point.

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 latest weak performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with J J and WK Kellogg

The main advantage of trading using opposite J J and WK Kellogg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J J 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 J J Snack 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.