Correlation Between Kellogg and COLUMBIA SPORTSWEAR
Can any of the company-specific risk be diversified away by investing in both Kellogg and COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kellogg Company and COLUMBIA SPORTSWEAR, you can compare the effects of market volatilities on Kellogg and COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellogg and COLUMBIA SPORTSWEAR.
Diversification Opportunities for Kellogg and COLUMBIA SPORTSWEAR
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kellogg and COLUMBIA is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Kellogg Company and COLUMBIA SPORTSWEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COLUMBIA SPORTSWEAR has no effect on the direction of Kellogg i.e., Kellogg and COLUMBIA SPORTSWEAR go up and down completely randomly.
Pair Corralation between Kellogg and COLUMBIA SPORTSWEAR
Assuming the 90 days horizon Kellogg Company is expected to generate 1.15 times more return on investment than COLUMBIA SPORTSWEAR. However, Kellogg is 1.15 times more volatile than COLUMBIA SPORTSWEAR. It trades about 0.15 of its potential returns per unit of risk. COLUMBIA SPORTSWEAR is currently generating about 0.04 per unit of risk. If you would invest 5,502 in Kellogg Company on September 1, 2024 and sell it today you would earn a total of 2,132 from holding Kellogg Company or generate 38.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.24% |
| Values | Daily Returns |
Kellogg Company vs. COLUMBIA SPORTSWEAR
Performance |
| Timeline |
| Kellogg Company |
| COLUMBIA SPORTSWEAR |
Kellogg and COLUMBIA SPORTSWEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kellogg and COLUMBIA SPORTSWEAR
The main advantage of trading using opposite Kellogg and COLUMBIA SPORTSWEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellogg position performs unexpectedly, COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR will offset losses from the drop in COLUMBIA SPORTSWEAR's long position.| Kellogg vs. Strategic Education | Kellogg vs. IDP EDUCATION LTD | Kellogg vs. ACCSYS TECHPLC EO | Kellogg vs. Digilife Technologies Limited |
| COLUMBIA SPORTSWEAR vs. SIVERS SEMICONDUCTORS AB | COLUMBIA SPORTSWEAR vs. Darden Restaurants | COLUMBIA SPORTSWEAR vs. Reliance Steel Aluminum | COLUMBIA SPORTSWEAR vs. Q2M Managementberatung AG |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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