Correlation Between WK Kellogg and Dow Jones
Can any of the company-specific risk be diversified away by investing in both WK Kellogg and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on WK Kellogg and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of WK Kellogg and Dow Jones.
Diversification Opportunities for WK Kellogg and Dow Jones
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KLG and Dow is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding WK Kellogg Co and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of WK Kellogg i.e., WK Kellogg and Dow Jones go up and down completely randomly.
Pair Corralation between WK Kellogg and Dow Jones
Considering the 90-day investment horizon WK Kellogg Co is expected to generate 4.65 times more return on investment than Dow Jones. However, WK Kellogg is 4.65 times more volatile than Dow Jones Industrial. It trades about 0.11 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.22 per unit of risk. If you would invest 1,736 in WK Kellogg Co on August 27, 2024 and sell it today you would earn a total of 150.00 from holding WK Kellogg Co or generate 8.64% 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. Dow Jones Industrial
Performance |
| Timeline |
WK Kellogg and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
WK Kellogg Co
Pair trading matchups for WK Kellogg
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with WK Kellogg and Dow Jones
The main advantage of trading using opposite WK Kellogg and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WK Kellogg position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| WK Kellogg vs. United Rentals | WK Kellogg vs. FTAI Aviation Ltd | WK Kellogg vs. CenterPoint Energy | WK Kellogg vs. Herc Holdings |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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