Correlation Between WK Kellogg and Nova Lithium
Can any of the company-specific risk be diversified away by investing in both WK Kellogg and Nova Lithium 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 Nova Lithium 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 Nova Lithium Corp, you can compare the effects of market volatilities on WK Kellogg and Nova Lithium 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 Nova Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of WK Kellogg and Nova Lithium.
Diversification Opportunities for WK Kellogg and Nova Lithium
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KLG and Nova is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding WK Kellogg Co and Nova Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Lithium Corp 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 Nova Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Lithium Corp has no effect on the direction of WK Kellogg i.e., WK Kellogg and Nova Lithium go up and down completely randomly.
Pair Corralation between WK Kellogg and Nova Lithium
Considering the 90-day investment horizon WK Kellogg Co is expected to under-perform the Nova Lithium. But the stock apears to be less risky and, when comparing its historical volatility, WK Kellogg Co is 2.52 times less risky than Nova Lithium. The stock trades about -0.14 of its potential returns per unit of risk. The Nova Lithium Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 26.00 in Nova Lithium Corp on October 26, 2024 and sell it today you would earn a total of 5.00 from holding Nova Lithium Corp or generate 19.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WK Kellogg Co vs. Nova Lithium Corp
Performance |
| Timeline |
| WK Kellogg |
| Nova Lithium Corp |
WK Kellogg and Nova Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WK Kellogg and Nova Lithium
The main advantage of trading using opposite WK Kellogg and Nova Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WK Kellogg position performs unexpectedly, Nova Lithium 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 Nova Lithium will offset losses from the drop in Nova Lithium's long position.| WK Kellogg vs. Tandy Leather Factory | WK Kellogg vs. SLR Investment Corp | WK Kellogg vs. Fidus Investment Corp | WK Kellogg vs. NorthWestern |
| Nova Lithium vs. WK Kellogg Co | Nova Lithium vs. Kellanova | Nova Lithium vs. Village Super Market | Nova Lithium vs. Coffee Holding Co |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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