Correlation Between Kellogg and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both Kellogg and Gamma Communications 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 Kellogg and Gamma Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kellogg Co and Gamma Communications PLC, you can compare the effects of market volatilities on Kellogg and Gamma Communications 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 Kellogg with a short position of Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellogg and Gamma Communications.
Diversification Opportunities for Kellogg and Gamma Communications
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kellogg and Gamma is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Kellogg Co and Gamma Communications PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications PLC and 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 Kellogg Co are associated (or correlated) with Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications PLC has no effect on the direction of Kellogg i.e., Kellogg and Gamma Communications go up and down completely randomly.
Pair Corralation between Kellogg and Gamma Communications
Assuming the 90 days trading horizon Kellogg Co is expected to generate 0.16 times more return on investment than Gamma Communications. However, Kellogg Co is 6.08 times less risky than Gamma Communications. It trades about 0.37 of its potential returns per unit of risk. Gamma Communications PLC is currently generating about -0.03 per unit of risk. If you would invest 8,119 in Kellogg Co on December 5, 2024 and sell it today you would earn a total of 127.00 from holding Kellogg Co or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kellogg Co vs. Gamma Communications PLC
Performance |
| Timeline |
| Kellogg |
| Gamma Communications PLC |
Kellogg and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kellogg and Gamma Communications
The main advantage of trading using opposite Kellogg and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellogg position performs unexpectedly, Gamma Communications 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.| Kellogg vs. Lindsell Train Investment | Kellogg vs. SBM Offshore NV | Kellogg vs. PureTech Health plc | Kellogg vs. Cardinal Health |
| Gamma Communications vs. Teradata Corp | Gamma Communications vs. Spirent Communications plc | Gamma Communications vs. Telecom Italia SpA | Gamma Communications vs. Heavitree Brewery |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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