Correlation Between Rheinmetall and Kellogg
Can any of the company-specific risk be diversified away by investing in both Rheinmetall and Kellogg 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 Rheinmetall and Kellogg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and Kellogg Company, you can compare the effects of market volatilities on Rheinmetall and Kellogg 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 Rheinmetall with a short position of Kellogg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and Kellogg.
Diversification Opportunities for Rheinmetall and Kellogg
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rheinmetall and Kellogg is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and Kellogg Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellogg Company and Rheinmetall 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 Rheinmetall AG are associated (or correlated) with Kellogg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kellogg Company has no effect on the direction of Rheinmetall i.e., Rheinmetall and Kellogg go up and down completely randomly.
Pair Corralation between Rheinmetall and Kellogg
Assuming the 90 days trading horizon Rheinmetall AG is expected to generate 3.11 times more return on investment than Kellogg. However, Rheinmetall is 3.11 times more volatile than Kellogg Company. It trades about 0.47 of its potential returns per unit of risk. Kellogg Company is currently generating about 0.2 per unit of risk. If you would invest 48,830 in Rheinmetall AG on August 29, 2024 and sell it today you would earn a total of 12,790 from holding Rheinmetall AG or generate 26.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rheinmetall AG vs. Kellogg Company
Performance |
| Timeline |
| Rheinmetall AG |
| Kellogg Company |
Rheinmetall and Kellogg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and Kellogg
The main advantage of trading using opposite Rheinmetall and Kellogg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall position performs unexpectedly, Kellogg 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 Kellogg will offset losses from the drop in Kellogg's long position.| Rheinmetall vs. Evolution Mining Limited | Rheinmetall vs. FUYO GENERAL LEASE | Rheinmetall vs. Jacquet Metal Service | Rheinmetall vs. SERI INDUSTRIAL EO |
| Kellogg vs. COLUMBIA SPORTSWEAR | Kellogg vs. LION ONE METALS | Kellogg vs. Playa Hotels Resorts | Kellogg vs. Western Copper and |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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