Correlation Between Kellanova and Colgate Palmolive
Can any of the company-specific risk be diversified away by investing in both Kellanova and Colgate Palmolive 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 Colgate Palmolive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kellanova and Colgate Palmolive, you can compare the effects of market volatilities on Kellanova and Colgate Palmolive 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 Colgate Palmolive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellanova and Colgate Palmolive.
Diversification Opportunities for Kellanova and Colgate Palmolive
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kellanova and Colgate is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and Colgate Palmolive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colgate Palmolive 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 Colgate Palmolive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colgate Palmolive has no effect on the direction of Kellanova i.e., Kellanova and Colgate Palmolive go up and down completely randomly.
Pair Corralation between Kellanova and Colgate Palmolive
Taking into account the 90-day investment horizon Kellanova is expected to generate 6.32 times less return on investment than Colgate Palmolive. But when comparing it to its historical volatility, Kellanova is 5.89 times less risky than Colgate Palmolive. It trades about 0.08 of its potential returns per unit of risk. Colgate Palmolive is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,466 in Colgate Palmolive on August 31, 2024 and sell it today you would earn a total of 210.00 from holding Colgate Palmolive or generate 2.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kellanova vs. Colgate Palmolive
Performance |
| Timeline |
| Kellanova |
| Colgate Palmolive |
Kellanova and Colgate Palmolive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kellanova and Colgate Palmolive
The main advantage of trading using opposite Kellanova and Colgate Palmolive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellanova position performs unexpectedly, Colgate Palmolive 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 Colgate Palmolive will offset losses from the drop in Colgate Palmolive's long position.| Kellanova vs. Campbell Soup | Kellanova vs. ConAgra Foods | Kellanova vs. Hormel Foods | Kellanova vs. Kraft Heinz Co |
| Colgate Palmolive vs. The Clorox | Colgate Palmolive vs. Procter Gamble | Colgate Palmolive vs. Unilever PLC ADR | Colgate Palmolive vs. Church Dwight |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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