Correlation Between Kellogg and BRF SA
Can any of the company-specific risk be diversified away by investing in both Kellogg and BRF SA 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 BRF SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kellogg Company and BRF SA, you can compare the effects of market volatilities on Kellogg and BRF SA 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 BRF SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellogg and BRF SA.
Diversification Opportunities for Kellogg and BRF SA
Good diversification
The 3 months correlation between Kellogg and BRF is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Kellogg Company and BRF SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRF SA 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 BRF SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRF SA has no effect on the direction of Kellogg i.e., Kellogg and BRF SA go up and down completely randomly.
Pair Corralation between Kellogg and BRF SA
Assuming the 90 days horizon Kellogg Company is expected to generate 0.22 times more return on investment than BRF SA. However, Kellogg Company is 4.49 times less risky than BRF SA. It trades about 0.02 of its potential returns per unit of risk. BRF SA is currently generating about -0.19 per unit of risk. If you would invest 7,722 in Kellogg Company on October 29, 2024 and sell it today you would earn a total of 14.00 from holding Kellogg Company or generate 0.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kellogg Company vs. BRF SA
Performance |
| Timeline |
| Kellogg Company |
| BRF SA |
Kellogg and BRF SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kellogg and BRF SA
The main advantage of trading using opposite Kellogg and BRF SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellogg position performs unexpectedly, BRF SA 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 BRF SA will offset losses from the drop in BRF SA's long position.| Kellogg vs. Granite Construction | Kellogg vs. GRUPO CARSO A1 | Kellogg vs. Hanison Construction Holdings | Kellogg vs. DAIRY FARM INTL |
| BRF SA vs. Performance Food Group | BRF SA vs. GWILLI FOOD | BRF SA vs. Tyson Foods | BRF SA vs. TreeHouse Foods |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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