Correlation Between WK Kellogg and John B
Can any of the company-specific risk be diversified away by investing in both WK Kellogg and John B 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 John B 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 John B Sanfilippo, you can compare the effects of market volatilities on WK Kellogg and John B 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 John B. Check out your portfolio center. Please also check ongoing floating volatility patterns of WK Kellogg and John B.
Diversification Opportunities for WK Kellogg and John B
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between KLG and John is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding WK Kellogg Co and John B Sanfilippo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John B Sanfilippo 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 John B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John B Sanfilippo has no effect on the direction of WK Kellogg i.e., WK Kellogg and John B go up and down completely randomly.
Pair Corralation between WK Kellogg and John B
Considering the 90-day investment horizon WK Kellogg Co is expected to generate 1.14 times more return on investment than John B. However, WK Kellogg is 1.14 times more volatile than John B Sanfilippo. It trades about -0.06 of its potential returns per unit of risk. John B Sanfilippo is currently generating about -0.25 per unit of risk. If you would invest 1,780 in WK Kellogg Co on November 2, 2024 and sell it today you would lose (80.00) from holding WK Kellogg Co or give up 4.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
WK Kellogg Co vs. John B Sanfilippo
Performance |
| Timeline |
| WK Kellogg |
| John B Sanfilippo |
WK Kellogg and John B Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WK Kellogg and John B
The main advantage of trading using opposite WK Kellogg and John B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WK Kellogg position performs unexpectedly, John B 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 John B will offset losses from the drop in John B's long position.| WK Kellogg vs. Wingstop | WK Kellogg vs. One Group Hospitality | WK Kellogg vs. Summa Silver Corp | WK Kellogg vs. Dominos Pizza Common |
| John B vs. Lancaster Colony | John B vs. Treehouse Foods | John B vs. Seneca Foods Corp | John B vs. J J Snack |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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