Correlation Between Kellogg and Corporate Office
Can any of the company-specific risk be diversified away by investing in both Kellogg and Corporate Office 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 Corporate Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kellogg Company and Corporate Office Properties, you can compare the effects of market volatilities on Kellogg and Corporate Office 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 Corporate Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellogg and Corporate Office.
Diversification Opportunities for Kellogg and Corporate Office
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kellogg and Corporate is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Kellogg Company and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro 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 Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of Kellogg i.e., Kellogg and Corporate Office go up and down completely randomly.
Pair Corralation between Kellogg and Corporate Office
Assuming the 90 days horizon Kellogg is expected to generate 1.41 times less return on investment than Corporate Office. But when comparing it to its historical volatility, Kellogg Company is 2.16 times less risky than Corporate Office. It trades about 0.19 of its potential returns per unit of risk. Corporate Office Properties is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,880 in Corporate Office Properties on September 13, 2024 and sell it today you would earn a total of 200.00 from holding Corporate Office Properties or generate 6.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kellogg Company vs. Corporate Office Properties
Performance |
| Timeline |
| Kellogg Company |
| Corporate Office Pro |
Kellogg and Corporate Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kellogg and Corporate Office
The main advantage of trading using opposite Kellogg and Corporate Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellogg position performs unexpectedly, Corporate Office 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 Corporate Office will offset losses from the drop in Corporate Office's long position.| Kellogg vs. United Breweries Co | Kellogg vs. China Resources Beer | Kellogg vs. Suntory Beverage Food | Kellogg vs. KAUFMAN ET BROAD |
| Corporate Office vs. ORIX JREIT INC | Corporate Office vs. Superior Plus Corp | Corporate Office vs. SIVERS SEMICONDUCTORS AB | Corporate Office vs. Norsk Hydro ASA |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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