Correlation Between LIFENET INSURANCE and Kellogg
Can any of the company-specific risk be diversified away by investing in both LIFENET INSURANCE and 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 LIFENET INSURANCE and Kellogg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFENET INSURANCE CO and Kellogg Company, you can compare the effects of market volatilities on LIFENET INSURANCE and 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 LIFENET INSURANCE with a short position of Kellogg. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFENET INSURANCE and Kellogg.
Diversification Opportunities for LIFENET INSURANCE and Kellogg
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LIFENET and Kellogg is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding LIFENET INSURANCE CO and Kellogg Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellogg Company and LIFENET INSURANCE 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 LIFENET INSURANCE CO are associated (or correlated) with Kellogg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kellogg Company has no effect on the direction of LIFENET INSURANCE i.e., LIFENET INSURANCE and Kellogg go up and down completely randomly.
Pair Corralation between LIFENET INSURANCE and Kellogg
Assuming the 90 days horizon LIFENET INSURANCE CO is expected to generate 3.06 times more return on investment than Kellogg. However, LIFENET INSURANCE is 3.06 times more volatile than Kellogg Company. It trades about 0.12 of its potential returns per unit of risk. Kellogg Company is currently generating about 0.25 per unit of risk. If you would invest 1,170 in LIFENET INSURANCE CO on September 4, 2024 and sell it today you would earn a total of 60.00 from holding LIFENET INSURANCE CO or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFENET INSURANCE CO vs. Kellogg Company
Performance |
| Timeline |
| LIFENET INSURANCE |
| Kellogg Company |
LIFENET INSURANCE and Kellogg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFENET INSURANCE and Kellogg
The main advantage of trading using opposite LIFENET INSURANCE and Kellogg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFENET INSURANCE position performs unexpectedly, 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 Kellogg will offset losses from the drop in Kellogg's long position.| LIFENET INSURANCE vs. Prudential plc | LIFENET INSURANCE vs. Wstenrot Wrttembergische AG | LIFENET INSURANCE vs. Gold Road Resources | LIFENET INSURANCE vs. Sumitomo Mitsui Construction |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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