Correlation Between Kellanova and JM Smucker

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Can any of the company-specific risk be diversified away by investing in both Kellanova and JM Smucker 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 JM Smucker into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kellanova and JM Smucker, you can compare the effects of market volatilities on Kellanova and JM Smucker 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 JM Smucker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellanova and JM Smucker.

Diversification Opportunities for Kellanova and JM Smucker

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between Kellanova and SJM is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and JM Smucker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JM Smucker 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 JM Smucker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JM Smucker has no effect on the direction of Kellanova i.e., Kellanova and JM Smucker go up and down completely randomly.

Pair Corralation between Kellanova and JM Smucker

Taking into account the 90-day investment horizon Kellanova is expected to generate 0.91 times more return on investment than JM Smucker. However, Kellanova is 1.1 times less risky than JM Smucker. It trades about -0.03 of its potential returns per unit of risk. JM Smucker is currently generating about -0.05 per unit of risk. If you would invest  6,233  in Kellanova on December 30, 2023 and sell it today you would lose (504.00) from holding Kellanova or give up 8.09% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Kellanova  vs.  JM Smucker

 Performance 
       Timeline  
Kellanova 

Risk-Adjusted Performance

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Low
 
High
Weak
Over the last 90 days Kellanova has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Kellanova is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.
JM Smucker 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days JM Smucker has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking indicators, JM Smucker is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Kellanova and JM Smucker Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kellanova and JM Smucker

The main advantage of trading using opposite Kellanova and JM Smucker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellanova position performs unexpectedly, JM Smucker 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 JM Smucker will offset losses from the drop in JM Smucker's long position.
The idea behind Kellanova and JM Smucker 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.
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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