Correlation Between CarsalesCom and Kellogg
Can any of the company-specific risk be diversified away by investing in both CarsalesCom 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 CarsalesCom and Kellogg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CarsalesCom and Kellogg Company, you can compare the effects of market volatilities on CarsalesCom 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 CarsalesCom with a short position of Kellogg. Check out your portfolio center. Please also check ongoing floating volatility patterns of CarsalesCom and Kellogg.
Diversification Opportunities for CarsalesCom and Kellogg
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CarsalesCom and Kellogg is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding CarsalesCom and Kellogg Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellogg Company and CarsalesCom 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 CarsalesCom 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 CarsalesCom i.e., CarsalesCom and Kellogg go up and down completely randomly.
Pair Corralation between CarsalesCom and Kellogg
Assuming the 90 days horizon CarsalesCom is expected to generate 0.99 times more return on investment than Kellogg. However, CarsalesCom is 1.01 times less risky than Kellogg. It trades about 0.1 of its potential returns per unit of risk. Kellogg Company is currently generating about 0.08 per unit of risk. If you would invest 1,480 in CarsalesCom on September 12, 2024 and sell it today you would earn a total of 960.00 from holding CarsalesCom or generate 64.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CarsalesCom vs. Kellogg Company
Performance |
| Timeline |
| CarsalesCom |
| Kellogg Company |
CarsalesCom and Kellogg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CarsalesCom and Kellogg
The main advantage of trading using opposite CarsalesCom and Kellogg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CarsalesCom 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.| CarsalesCom vs. Tencent Holdings | CarsalesCom vs. Superior Plus Corp | CarsalesCom vs. SIVERS SEMICONDUCTORS AB | CarsalesCom vs. NorAm Drilling AS |
| Kellogg vs. Corporate Office Properties | Kellogg vs. bet at home AG | Kellogg vs. CarsalesCom | Kellogg vs. TRADEDOUBLER AB SK |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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