Correlation Between Scepter Holdings and Kellanova
Can any of the company-specific risk be diversified away by investing in both Scepter Holdings 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 Scepter Holdings and Kellanova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scepter Holdings and Kellanova, you can compare the effects of market volatilities on Scepter Holdings 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 Scepter Holdings with a short position of Kellanova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scepter Holdings and Kellanova.
Diversification Opportunities for Scepter Holdings and Kellanova
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Scepter and Kellanova is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Scepter Holdings and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and Scepter Holdings 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 Scepter Holdings 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 Scepter Holdings i.e., Scepter Holdings and Kellanova go up and down completely randomly.
Pair Corralation between Scepter Holdings and Kellanova
Given the investment horizon of 90 days Scepter Holdings is expected to generate 11.22 times more return on investment than Kellanova. However, Scepter Holdings is 11.22 times more volatile than Kellanova. It trades about 0.1 of its potential returns per unit of risk. Kellanova is currently generating about 0.12 per unit of risk. If you would invest 0.07 in Scepter Holdings on September 4, 2024 and sell it today you would earn a total of 0.03 from holding Scepter Holdings or generate 42.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scepter Holdings vs. Kellanova
Performance |
| Timeline |
| Scepter Holdings |
| Kellanova |
Scepter Holdings and Kellanova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scepter Holdings and Kellanova
The main advantage of trading using opposite Scepter Holdings and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scepter Holdings 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.| Scepter Holdings vs. Kellanova | Scepter Holdings vs. Lancaster Colony | Scepter Holdings vs. The A2 Milk | Scepter Holdings vs. Artisan Consumer Goods |
| Kellanova vs. Campbell Soup | Kellanova vs. ConAgra Foods | Kellanova vs. Hormel Foods | Kellanova vs. Kraft Heinz Co |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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