Correlation Between Kellanova and Associated British
Can any of the company-specific risk be diversified away by investing in both Kellanova and Associated British 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 Kellanova and Associated British into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kellanova and Associated British Foods, you can compare the effects of market volatilities on Kellanova and Associated British 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 Kellanova with a short position of Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellanova and Associated British.
Diversification Opportunities for Kellanova and Associated British
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kellanova and Associated is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods and Kellanova 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 Kellanova are associated (or correlated) with Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Kellanova i.e., Kellanova and Associated British go up and down completely randomly.
Pair Corralation between Kellanova and Associated British
Taking into account the 90-day investment horizon Kellanova is expected to generate 1.09 times less return on investment than Associated British. But when comparing it to its historical volatility, Kellanova is 1.47 times less risky than Associated British. It trades about 0.12 of its potential returns per unit of risk. Associated British Foods is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,987 in Associated British Foods on January 20, 2024 and sell it today you would earn a total of 79.00 from holding Associated British Foods or generate 2.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kellanova vs. Associated British Foods
Performance |
| Timeline |
| Kellanova |
| Associated British Foods |
Kellanova and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kellanova and Associated British
The main advantage of trading using opposite Kellanova and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellanova position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| Kellanova vs. Green Globe International | Kellanova vs. Greenlane Holdings | Kellanova vs. 22nd Century Group | Kellanova vs. 1606 Corp |
| Associated British vs. Kellanova | Associated British vs. Lancaster Colony | Associated British vs. The A2 Milk | Associated British vs. Altavoz Entertainment |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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