Correlation Between Kellogg and LION ONE
Can any of the company-specific risk be diversified away by investing in both Kellogg and LION ONE 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 LION ONE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kellogg Company and LION ONE METALS, you can compare the effects of market volatilities on Kellogg and LION ONE 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 LION ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellogg and LION ONE.
Diversification Opportunities for Kellogg and LION ONE
Significant diversification
The 3 months correlation between Kellogg and LION is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kellogg Company and LION ONE METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LION ONE METALS 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 LION ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LION ONE METALS has no effect on the direction of Kellogg i.e., Kellogg and LION ONE go up and down completely randomly.
Pair Corralation between Kellogg and LION ONE
Assuming the 90 days horizon Kellogg Company is expected to generate 0.22 times more return on investment than LION ONE. However, Kellogg Company is 4.64 times less risky than LION ONE. It trades about 0.2 of its potential returns per unit of risk. LION ONE METALS is currently generating about -0.05 per unit of risk. If you would invest 7,390 in Kellogg Company on September 1, 2024 and sell it today you would earn a total of 244.00 from holding Kellogg Company or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Kellogg Company vs. LION ONE METALS
Performance |
| Timeline |
| Kellogg Company |
| LION ONE METALS |
Kellogg and LION ONE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kellogg and LION ONE
The main advantage of trading using opposite Kellogg and LION ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellogg position performs unexpectedly, LION ONE 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 LION ONE will offset losses from the drop in LION ONE's long position.| Kellogg vs. Strategic Education | Kellogg vs. IDP EDUCATION LTD | Kellogg vs. ACCSYS TECHPLC EO | Kellogg vs. Digilife Technologies Limited |
| LION ONE vs. Corporate Office Properties | LION ONE vs. Eagle Materials | LION ONE vs. Plastic Omnium | LION ONE vs. KENEDIX OFFICE INV |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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