Correlation Between Yellow Pages and Kellogg
Can any of the company-specific risk be diversified away by investing in both Yellow Pages 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 Yellow Pages and Kellogg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yellow Pages Limited and Kellogg Company, you can compare the effects of market volatilities on Yellow Pages 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 Yellow Pages with a short position of Kellogg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yellow Pages and Kellogg.
Diversification Opportunities for Yellow Pages and Kellogg
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Yellow and Kellogg is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Yellow Pages Limited and Kellogg Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellogg Company and Yellow Pages 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 Yellow Pages Limited 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 Yellow Pages i.e., Yellow Pages and Kellogg go up and down completely randomly.
Pair Corralation between Yellow Pages and Kellogg
Assuming the 90 days horizon Yellow Pages Limited is expected to generate 2.68 times more return on investment than Kellogg. However, Yellow Pages is 2.68 times more volatile than Kellogg Company. It trades about 0.33 of its potential returns per unit of risk. Kellogg Company is currently generating about 0.2 per unit of risk. If you would invest 624.00 in Yellow Pages Limited on September 1, 2024 and sell it today you would earn a total of 96.00 from holding Yellow Pages Limited or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yellow Pages Limited vs. Kellogg Company
Performance |
| Timeline |
| Yellow Pages Limited |
| Kellogg Company |
Yellow Pages and Kellogg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yellow Pages and Kellogg
The main advantage of trading using opposite Yellow Pages and Kellogg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yellow Pages 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.| Yellow Pages vs. United Rentals | Yellow Pages vs. UNITED RENTALS | Yellow Pages vs. Regions Financial | Yellow Pages vs. REVO INSURANCE SPA |
| Kellogg vs. Strategic Education | Kellogg vs. IDP EDUCATION LTD | Kellogg vs. ACCSYS TECHPLC EO | Kellogg vs. Digilife Technologies Limited |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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