Correlation Between WK Kellogg and Australian Oilseeds
Can any of the company-specific risk be diversified away by investing in both WK Kellogg and Australian Oilseeds 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 Australian Oilseeds 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 Australian Oilseeds Holdings, you can compare the effects of market volatilities on WK Kellogg and Australian Oilseeds 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 Australian Oilseeds. Check out your portfolio center. Please also check ongoing floating volatility patterns of WK Kellogg and Australian Oilseeds.
Diversification Opportunities for WK Kellogg and Australian Oilseeds
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KLG and Australian is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding WK Kellogg Co and Australian Oilseeds Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Oilseeds 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 Australian Oilseeds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Oilseeds has no effect on the direction of WK Kellogg i.e., WK Kellogg and Australian Oilseeds go up and down completely randomly.
Pair Corralation between WK Kellogg and Australian Oilseeds
Considering the 90-day investment horizon WK Kellogg Co is expected to under-perform the Australian Oilseeds. But the stock apears to be less risky and, when comparing its historical volatility, WK Kellogg Co is 3.15 times less risky than Australian Oilseeds. The stock trades about -0.14 of its potential returns per unit of risk. The Australian Oilseeds Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 113.00 in Australian Oilseeds Holdings on October 25, 2024 and sell it today you would earn a total of 7.00 from holding Australian Oilseeds Holdings or generate 6.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WK Kellogg Co vs. Australian Oilseeds Holdings
Performance |
| Timeline |
| WK Kellogg |
| Australian Oilseeds |
WK Kellogg and Australian Oilseeds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WK Kellogg and Australian Oilseeds
The main advantage of trading using opposite WK Kellogg and Australian Oilseeds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WK Kellogg position performs unexpectedly, Australian Oilseeds 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 Australian Oilseeds will offset losses from the drop in Australian Oilseeds' long position.| WK Kellogg vs. Academy Sports Outdoors | WK Kellogg vs. Proficient Auto Logistics, | WK Kellogg vs. Life Time Group | WK Kellogg vs. flyExclusive, |
| Australian Oilseeds vs. Dine Brands Global | Australian Oilseeds vs. Douglas Emmett | Australian Oilseeds vs. One Group Hospitality | Australian Oilseeds vs. Vornado Realty Trust |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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