Correlation Between UDR and Kellogg
Can any of the company-specific risk be diversified away by investing in both UDR 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 UDR and Kellogg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UDR Inc and Kellogg Company, you can compare the effects of market volatilities on UDR 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 UDR with a short position of Kellogg. Check out your portfolio center. Please also check ongoing floating volatility patterns of UDR and Kellogg.
Diversification Opportunities for UDR and Kellogg
Excellent diversification
The 3 months correlation between UDR and Kellogg is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding UDR Inc and Kellogg Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellogg Company and UDR 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 UDR Inc 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 UDR i.e., UDR and Kellogg go up and down completely randomly.
Pair Corralation between UDR and Kellogg
Assuming the 90 days horizon UDR Inc is expected to generate 0.89 times more return on investment than Kellogg. However, UDR Inc is 1.12 times less risky than Kellogg. It trades about 0.22 of its potential returns per unit of risk. Kellogg Company is currently generating about 0.14 per unit of risk. If you would invest 3,965 in UDR Inc on November 27, 2024 and sell it today you would earn a total of 159.00 from holding UDR Inc or generate 4.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UDR Inc vs. Kellogg Company
Performance |
| Timeline |
| UDR Inc |
| Kellogg Company |
UDR and Kellogg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UDR and Kellogg
The main advantage of trading using opposite UDR and Kellogg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UDR 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.| UDR vs. SmarTone Telecommunications Holdings | UDR vs. Singapore Telecommunications Limited | UDR vs. Geely Automobile Holdings | UDR vs. INTERSHOP Communications Aktiengesellschaft |
| Kellogg vs. Norwegian Air Shuttle | Kellogg vs. Enter Air SA | Kellogg vs. Daito Trust Construction | Kellogg vs. Delta Air Lines |
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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