Correlation Between Adient PLC and WK Kellogg
Can any of the company-specific risk be diversified away by investing in both Adient PLC 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 Adient PLC and WK Kellogg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adient PLC and WK Kellogg Co, you can compare the effects of market volatilities on Adient PLC 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 Adient PLC with a short position of WK Kellogg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adient PLC and WK Kellogg.
Diversification Opportunities for Adient PLC and WK Kellogg
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Adient and KLG is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Adient PLC and WK Kellogg Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WK Kellogg and Adient PLC 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 Adient PLC 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 Adient PLC i.e., Adient PLC and WK Kellogg go up and down completely randomly.
Pair Corralation between Adient PLC and WK Kellogg
Given the investment horizon of 90 days Adient PLC is expected to generate 0.78 times more return on investment than WK Kellogg. However, Adient PLC is 1.27 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 -0.08 per unit of risk. If you would invest 1,719 in Adient PLC on October 30, 2024 and sell it today you would earn a total of 12.00 from holding Adient PLC or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adient PLC vs. WK Kellogg Co
Performance |
| Timeline |
| Adient PLC |
| WK Kellogg |
Adient PLC and WK Kellogg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adient PLC and WK Kellogg
The main advantage of trading using opposite Adient PLC and WK Kellogg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adient PLC 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.| Adient PLC vs. Gentex | Adient PLC vs. Autoliv | Adient PLC vs. Fox Factory Holding | Adient PLC vs. Dana Inc |
| WK Kellogg vs. Primoris Services | WK Kellogg vs. Tesla Inc | WK Kellogg vs. Topbuild Corp | WK Kellogg vs. Iridium Communications |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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