Correlation Between Kellogg and Flowers Foods
Can any of the company-specific risk be diversified away by investing in both Kellogg and Flowers Foods 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 Flowers Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kellogg Company and Flowers Foods, you can compare the effects of market volatilities on Kellogg and Flowers Foods 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 Flowers Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellogg and Flowers Foods.
Diversification Opportunities for Kellogg and Flowers Foods
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kellogg and Flowers is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Kellogg Company and Flowers Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flowers Foods 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 Flowers Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flowers Foods has no effect on the direction of Kellogg i.e., Kellogg and Flowers Foods go up and down completely randomly.
Pair Corralation between Kellogg and Flowers Foods
Assuming the 90 days horizon Kellogg Company is expected to generate 0.33 times more return on investment than Flowers Foods. However, Kellogg Company is 3.02 times less risky than Flowers Foods. It trades about 0.13 of its potential returns per unit of risk. Flowers Foods is currently generating about -0.15 per unit of risk. If you would invest 7,708 in Kellogg Company on October 23, 2024 and sell it today you would earn a total of 102.00 from holding Kellogg Company or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
Kellogg Company vs. Flowers Foods
Performance |
| Timeline |
| Kellogg Company |
| Flowers Foods |
Kellogg and Flowers Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kellogg and Flowers Foods
The main advantage of trading using opposite Kellogg and Flowers Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellogg position performs unexpectedly, Flowers Foods 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 Flowers Foods will offset losses from the drop in Flowers Foods' long position.| Kellogg vs. BE Semiconductor Industries | Kellogg vs. Elmos Semiconductor SE | Kellogg vs. Hua Hong Semiconductor | Kellogg vs. Hyrican Informationssysteme Aktiengesellschaft |
| Flowers Foods vs. Pentair plc | Flowers Foods vs. ALTAIR RES INC | Flowers Foods vs. AOI Electronics Co | Flowers Foods vs. ARROW ELECTRONICS |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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