Correlation Between WK Kellogg and Petróleo Brasileiro
Can any of the company-specific risk be diversified away by investing in both WK Kellogg and Petróleo Brasileiro 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 Petróleo Brasileiro 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 Petrleo Brasileiro SA, you can compare the effects of market volatilities on WK Kellogg and Petróleo Brasileiro 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 Petróleo Brasileiro. Check out your portfolio center. Please also check ongoing floating volatility patterns of WK Kellogg and Petróleo Brasileiro.
Diversification Opportunities for WK Kellogg and Petróleo Brasileiro
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between KLG and Petróleo is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding WK Kellogg Co and Petrleo Brasileiro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petróleo Brasileiro 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 Petróleo Brasileiro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petróleo Brasileiro has no effect on the direction of WK Kellogg i.e., WK Kellogg and Petróleo Brasileiro go up and down completely randomly.
Pair Corralation between WK Kellogg and Petróleo Brasileiro
Considering the 90-day investment horizon WK Kellogg Co is expected to generate 1.63 times more return on investment than Petróleo Brasileiro. However, WK Kellogg is 1.63 times more volatile than Petrleo Brasileiro SA. It trades about 0.04 of its potential returns per unit of risk. Petrleo Brasileiro SA is currently generating about 0.04 per unit of risk. If you would invest 1,629 in WK Kellogg Co on August 28, 2024 and sell it today you would earn a total of 386.00 from holding WK Kellogg Co or generate 23.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 83.33% |
| Values | Daily Returns |
WK Kellogg Co vs. Petrleo Brasileiro SA
Performance |
| Timeline |
| WK Kellogg |
| Petróleo Brasileiro |
WK Kellogg and Petróleo Brasileiro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WK Kellogg and Petróleo Brasileiro
The main advantage of trading using opposite WK Kellogg and Petróleo Brasileiro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WK Kellogg position performs unexpectedly, Petróleo Brasileiro 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 Petróleo Brasileiro will offset losses from the drop in Petróleo Brasileiro'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 |
| Petróleo Brasileiro vs. Vital Energy | Petróleo Brasileiro vs. Permian Resources | Petróleo Brasileiro vs. Magnolia Oil Gas | Petróleo Brasileiro vs. Ring Energy |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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