Correlation Between Kellogg and Monks Investment
Can any of the company-specific risk be diversified away by investing in both Kellogg and Monks Investment 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 Monks Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kellogg Co and Monks Investment Trust, you can compare the effects of market volatilities on Kellogg and Monks Investment 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 Monks Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellogg and Monks Investment.
Diversification Opportunities for Kellogg and Monks Investment
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kellogg and Monks is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Kellogg Co and Monks Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monks Investment Trust 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 Monks Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monks Investment Trust has no effect on the direction of Kellogg i.e., Kellogg and Monks Investment go up and down completely randomly.
Pair Corralation between Kellogg and Monks Investment
Assuming the 90 days trading horizon Kellogg is expected to generate 9.79 times less return on investment than Monks Investment. But when comparing it to its historical volatility, Kellogg Co is 2.82 times less risky than Monks Investment. It trades about 0.03 of its potential returns per unit of risk. Monks Investment Trust is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 125,200 in Monks Investment Trust on September 13, 2024 and sell it today you would earn a total of 2,000 from holding Monks Investment Trust or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kellogg Co vs. Monks Investment Trust
Performance |
| Timeline |
| Kellogg |
| Monks Investment Trust |
Kellogg and Monks Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kellogg and Monks Investment
The main advantage of trading using opposite Kellogg and Monks Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellogg position performs unexpectedly, Monks Investment 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 Monks Investment will offset losses from the drop in Monks Investment's long position.| Kellogg vs. Ion Beam Applications | Kellogg vs. Fidelity National Information | Kellogg vs. Abingdon Health Plc | Kellogg vs. MyHealthChecked Plc |
| Monks Investment vs. Catalyst Media Group | Monks Investment vs. CATLIN GROUP | Monks Investment vs. Tamburi Investment Partners | Monks Investment vs. Magnora ASA |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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