Correlation Between Kellogg and LG Electronics
Can any of the company-specific risk be diversified away by investing in both Kellogg and LG Electronics 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 LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kellogg Company and LG Electronics, you can compare the effects of market volatilities on Kellogg and LG Electronics 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 LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellogg and LG Electronics.
Diversification Opportunities for Kellogg and LG Electronics
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kellogg and LGLG is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Kellogg Company and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics 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 LG Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Electronics has no effect on the direction of Kellogg i.e., Kellogg and LG Electronics go up and down completely randomly.
Pair Corralation between Kellogg and LG Electronics
Assuming the 90 days horizon Kellogg Company is expected to generate 0.21 times more return on investment than LG Electronics. However, Kellogg Company is 4.7 times less risky than LG Electronics. It trades about 0.16 of its potential returns per unit of risk. LG Electronics is currently generating about -0.05 per unit of risk. If you would invest 7,152 in Kellogg Company on November 2, 2024 and sell it today you would earn a total of 640.00 from holding Kellogg Company or generate 8.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.04% |
| Values | Daily Returns |
Kellogg Company vs. LG Electronics
Performance |
| Timeline |
| Kellogg Company |
| LG Electronics |
Kellogg and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kellogg and LG Electronics
The main advantage of trading using opposite Kellogg and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellogg position performs unexpectedly, LG Electronics 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 LG Electronics will offset losses from the drop in LG Electronics' long position.| Kellogg vs. Cleanaway Waste Management | Kellogg vs. ETFS Coffee ETC | Kellogg vs. CeoTronics AG | Kellogg vs. Darden Restaurants |
| LG Electronics vs. Apple Inc | LG Electronics vs. Apple Inc | LG Electronics vs. Samsung Electronics Co | LG Electronics vs. Sony Group Corp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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