Correlation Between Kellogg and LondonMetric Property
Can any of the company-specific risk be diversified away by investing in both Kellogg and LondonMetric Property 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 LondonMetric Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kellogg Company and LondonMetric Property Plc, you can compare the effects of market volatilities on Kellogg and LondonMetric Property 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 LondonMetric Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellogg and LondonMetric Property.
Diversification Opportunities for Kellogg and LondonMetric Property
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kellogg and LondonMetric is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Kellogg Company and LondonMetric Property Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LondonMetric Property 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 Company are associated (or correlated) with LondonMetric Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LondonMetric Property Plc has no effect on the direction of Kellogg i.e., Kellogg and LondonMetric Property go up and down completely randomly.
Pair Corralation between Kellogg and LondonMetric Property
Assuming the 90 days horizon Kellogg Company is expected to under-perform the LondonMetric Property. But the stock apears to be less risky and, when comparing its historical volatility, Kellogg Company is 3.13 times less risky than LondonMetric Property. The stock trades about -0.01 of its potential returns per unit of risk. The LondonMetric Property Plc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 217.00 in LondonMetric Property Plc on November 2, 2024 and sell it today you would earn a total of 1.00 from holding LondonMetric Property Plc or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kellogg Company vs. LondonMetric Property Plc
Performance |
| Timeline |
| Kellogg Company |
| LondonMetric Property Plc |
Kellogg and LondonMetric Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kellogg and LondonMetric Property
The main advantage of trading using opposite Kellogg and LondonMetric Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellogg position performs unexpectedly, LondonMetric Property 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 LondonMetric Property will offset losses from the drop in LondonMetric Property's long position.| Kellogg vs. Cleanaway Waste Management | Kellogg vs. ETFS Coffee ETC | Kellogg vs. CeoTronics AG | Kellogg vs. Darden Restaurants |
| LondonMetric Property vs. Xenia Hotels Resorts | LondonMetric Property vs. MAVEN WIRELESS SWEDEN | LondonMetric Property vs. MHP Hotel AG | LondonMetric Property vs. NH HOTEL GROUP |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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