Correlation Between WK Kellogg and Coca Cola
Can any of the company-specific risk be diversified away by investing in both WK Kellogg and Coca Cola 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 WK Kellogg and Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WK Kellogg Co and Coca Cola Consolidated, you can compare the effects of market volatilities on WK Kellogg and Coca Cola 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 WK Kellogg with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of WK Kellogg and Coca Cola.
Diversification Opportunities for WK Kellogg and Coca Cola
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KLG and Coca is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding WK Kellogg Co and Coca Cola Consolidated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Consolidated and WK 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 WK Kellogg Co are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola Consolidated has no effect on the direction of WK Kellogg i.e., WK Kellogg and Coca Cola go up and down completely randomly.
Pair Corralation between WK Kellogg and Coca Cola
Considering the 90-day investment horizon WK Kellogg is expected to generate 1.87 times less return on investment than Coca Cola. In addition to that, WK Kellogg is 1.52 times more volatile than Coca Cola Consolidated. It trades about 0.04 of its total potential returns per unit of risk. Coca Cola Consolidated is currently generating about 0.11 per unit of volatility. If you would invest 63,045 in Coca Cola Consolidated on August 28, 2024 and sell it today you would earn a total of 66,915 from holding Coca Cola Consolidated or generate 106.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 83.33% |
| Values | Daily Returns |
WK Kellogg Co vs. Coca Cola Consolidated
Performance |
| Timeline |
| WK Kellogg |
| Coca Cola Consolidated |
WK Kellogg and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WK Kellogg and Coca Cola
The main advantage of trading using opposite WK Kellogg and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WK Kellogg position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.| WK Kellogg vs. Bellring Brands LLC | WK Kellogg vs. Ingredion Incorporated | WK Kellogg vs. Nomad Foods | WK Kellogg vs. Simply Good Foods |
| Coca Cola vs. The Coca Cola | Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Keurig Dr Pepper |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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