Correlation Between Coffee Holding and Kellogg
Can any of the company-specific risk be diversified away by investing in both Coffee Holding 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 Coffee Holding and Kellogg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coffee Holding Co and Kellogg Company, you can compare the effects of market volatilities on Coffee Holding 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 Coffee Holding with a short position of Kellogg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coffee Holding and Kellogg.
Diversification Opportunities for Coffee Holding and Kellogg
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Coffee and Kellogg is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Holding Co and Kellogg Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellogg Company and Coffee Holding 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 Coffee Holding 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 Coffee Holding i.e., Coffee Holding and Kellogg go up and down completely randomly.
Pair Corralation between Coffee Holding and Kellogg
Assuming the 90 days horizon Coffee Holding Co is expected to under-perform the Kellogg. In addition to that, Coffee Holding is 5.93 times more volatile than Kellogg Company. It trades about -0.01 of its total potential returns per unit of risk. Kellogg Company is currently generating about 0.04 per unit of volatility. If you would invest 7,818 in Kellogg Company on November 4, 2024 and sell it today you would earn a total of 38.00 from holding Kellogg Company or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Coffee Holding Co vs. Kellogg Company
Performance |
| Timeline |
| Coffee Holding |
| Kellogg Company |
Coffee Holding and Kellogg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coffee Holding and Kellogg
The main advantage of trading using opposite Coffee Holding and Kellogg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coffee Holding 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.| Coffee Holding vs. CHEMICAL INDUSTRIES | Coffee Holding vs. Commercial Vehicle Group | Coffee Holding vs. UNIVMUSIC GRPADR050 | Coffee Holding vs. Mitsui Chemicals |
| Kellogg vs. OPERA SOFTWARE | Kellogg vs. GBS Software AG | Kellogg vs. Unity Software | Kellogg vs. FORMPIPE SOFTWARE AB |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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