Correlation Between National Storage and Kellanova

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

By analyzing existing cross correlation between National Storage Affiliates and Kellanova, you can compare the effects of market volatilities on National Storage 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 National Storage with a short position of Kellanova. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Kellanova.

Diversification Opportunities for National Storage and Kellanova

0.38

Correlation Coefficient

National Storage  Kellanova

Weak diversification

The 3 months correlation between National and Kellanova is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding National Storage Affiliates and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and National Storage 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 National Storage Affiliates 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 National Storage i.e., National Storage and Kellanova go up and down completely randomly.

Pair Corralation between National Storage and Kellanova

Considering the 90-day investment horizon National Storage is expected to generate 1.6 times less return on investment than Kellanova. In addition to that, National Storage is 1.15 times more volatile than Kellanova. It trades about 0.06 of its total potential returns per unit of risk. Kellanova is currently generating about 0.11 per unit of volatility. If you would invest  5,067  in Kellanova on August 10, 2024 and sell it today you would earn a total of  2,999  from holding Kellanova or generate 59.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

National Storage Affiliates  vs.  Kellanova

National Storage Aff

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in National Storage Affiliates are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, National Storage is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Kellanova

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Kellanova may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with National Storage and Kellanova

The main advantage of trading using opposite National Storage and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage 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.

The idea behind National Storage Affiliates and Kellanova 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.