Correlation Between Kellanova and Target
Can any of the company-specific risk be diversified away by investing in both Kellanova and Target 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 Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kellanova and Target, you can compare the effects of market volatilities on Kellanova and Target 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 Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellanova and Target.
Diversification Opportunities for Kellanova and Target
Very weak diversification
The 3 months correlation between Kellanova and Target is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 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 Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Kellanova i.e., Kellanova and Target go up and down completely randomly.
Pair Corralation between Kellanova and Target
Taking into account the 90-day investment horizon Kellanova is expected to generate 0.91 times more return on investment than Target. However, Kellanova is 1.1 times less risky than Target. It trades about 0.26 of its potential returns per unit of risk. Target is currently generating about -0.16 per unit of risk. If you would invest 5,565 in Kellanova on January 25, 2024 and sell it today you would earn a total of 313.00 from holding Kellanova or generate 5.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kellanova vs. Target
Performance |
| Timeline |
| Kellanova |
| Target |
Kellanova and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kellanova and Target
The main advantage of trading using opposite Kellanova and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellanova position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.| Kellanova vs. Campbell Soup | Kellanova vs. ConAgra Foods | Kellanova vs. Hormel Foods | Kellanova vs. Kraft Heinz Co |
| Target vs. Costco Wholesale Corp | Target vs. BJs Wholesale Club | Target vs. Dollar Tree | Target vs. Dollar General |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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