Correlation Between Kellanova and Tootsie Roll

Can any of the company-specific risk be diversified away by investing in both Kellanova and Tootsie Roll 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 Tootsie Roll into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kellanova and Tootsie Roll Industries, you can compare the effects of market volatilities on Kellanova and Tootsie Roll 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 Tootsie Roll. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellanova and Tootsie Roll.

Diversification Opportunities for Kellanova and Tootsie Roll

-0.34

Correlation Coefficient

Kellanova  Tootsie Roll

Very good diversification

The 3 months correlation between Kellanova and Tootsie is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and Tootsie Roll Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tootsie Roll Industries 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 Tootsie Roll. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tootsie Roll Industries has no effect on the direction of Kellanova i.e., Kellanova and Tootsie Roll go up and down completely randomly.

Pair Corralation between Kellanova and Tootsie Roll

Taking into account the 90-day investment horizon Kellanova is expected to under-perform the Tootsie Roll. But the stock apears to be less risky and, when comparing its historical volatility, Kellanova is 3.86 times less risky than Tootsie Roll. The stock trades about -0.09 of its potential returns per unit of risk. The Tootsie Roll Industries is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,335  in Tootsie Roll Industries on May 6, 2025 and sell it today you would earn a total of  488.00  from holding Tootsie Roll Industries or generate 14.63% return on investment over 90 days.

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

Kellanova  vs.  Tootsie Roll Industries

Kellanova

Risk-Adjusted Performance

Very 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 current stock price mess, may contribute to short-term losses for the institutional investors.

Tootsie Roll Industries

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tootsie Roll Industries are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Tootsie Roll reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kellanova and Tootsie Roll

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

The idea behind Kellanova and Tootsie Roll Industries 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.