Correlation Between WK Kellogg and Laird Superfood

Can any of the company-specific risk be diversified away by investing in both WK Kellogg and Laird Superfood 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 Laird Superfood 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 Laird Superfood, you can compare the effects of market volatilities on WK Kellogg and Laird Superfood 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 Laird Superfood. Check out your portfolio center. Please also check ongoing floating volatility patterns of WK Kellogg and Laird Superfood.

Diversification Opportunities for WK Kellogg and Laird Superfood

-0.57

Correlation Coefficient

WK Kellogg  Laird Superfood

Excellent diversification

The 3 months correlation between KLG and Laird is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding WK Kellogg Co and Laird Superfood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laird Superfood 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 Laird Superfood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laird Superfood has no effect on the direction of WK Kellogg i.e., WK Kellogg and Laird Superfood go up and down completely randomly.

Pair Corralation between WK Kellogg and Laird Superfood

Considering the 90-day investment horizon WK Kellogg Co is expected to generate 0.51 times more return on investment than Laird Superfood. However, WK Kellogg Co is 1.95 times less risky than Laird Superfood. It trades about -0.07 of its potential returns per unit of risk. Laird Superfood is currently generating about -0.13 per unit of risk. If you would invest  1,905  in WK Kellogg Co on January 25, 2025 and sell it today you would lose (81.00) from holding WK Kellogg Co or give up 4.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

WK Kellogg Co  vs.  Laird Superfood

WK Kellogg

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WK Kellogg Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, WK Kellogg may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Laird Superfood

Risk-Adjusted Performance

Very Weak

Over the last 90 days Laird Superfood has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with WK Kellogg and Laird Superfood

The main advantage of trading using opposite WK Kellogg and Laird Superfood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WK Kellogg position performs unexpectedly, Laird Superfood 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 Laird Superfood will offset losses from the drop in Laird Superfood's long position.

The idea behind WK Kellogg Co and Laird Superfood pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..