Correlation Between Associated British and Kellanova
Can any of the company-specific risk be diversified away by investing in both Associated British and Kellanova 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 Associated British and Kellanova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Kellanova, you can compare the effects of market volatilities on Associated British and Kellanova 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 Associated British with a short position of Kellanova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Kellanova.
Diversification Opportunities for Associated British and Kellanova
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Associated and Kellanova is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and Associated British 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 Associated British Foods are associated (or correlated) with Kellanova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kellanova has no effect on the direction of Associated British i.e., Associated British and Kellanova go up and down completely randomly.
Pair Corralation between Associated British and Kellanova
Assuming the 90 days horizon Associated British Foods is expected to generate 1.52 times more return on investment than Kellanova. However, Associated British is 1.52 times more volatile than Kellanova. It trades about 0.06 of its potential returns per unit of risk. Kellanova is currently generating about -0.01 per unit of risk. If you would invest 2,040 in Associated British Foods on December 29, 2023 and sell it today you would earn a total of 1,135 from holding Associated British Foods or generate 55.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.8% |
Values | Daily Returns |
Associated British Foods vs. Kellanova
Performance |
Timeline |
Associated British Foods |
Kellanova |
Associated British and Kellanova Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Associated British and Kellanova
The main advantage of trading using opposite Associated British and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Kellanova 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 Kellanova will offset losses from the drop in Kellanova's long position.Associated British vs. Kraft Heinz Co | Associated British vs. General Mills | Associated British vs. Danone PK | Associated British vs. McCormick Company Incorporated |
Kellanova vs. Bunge Limited | Kellanova vs. Altria Group | Kellanova vs. Philip Morris International | Kellanova vs. Everest Consolidator Acquisition |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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