Correlation Between Kellanova and Farmer Bros
Can any of the company-specific risk be diversified away by investing in both Kellanova and Farmer Bros 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 Farmer Bros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kellanova and Farmer Bros Co, you can compare the effects of market volatilities on Kellanova and Farmer Bros 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 Farmer Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellanova and Farmer Bros.
Diversification Opportunities for Kellanova and Farmer Bros
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Kellanova and Farmer is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and Farmer Bros Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmer Bros 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 Farmer Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmer Bros has no effect on the direction of Kellanova i.e., Kellanova and Farmer Bros go up and down completely randomly.
Pair Corralation between Kellanova and Farmer Bros
Taking into account the 90-day investment horizon Kellanova is expected to generate 21.9 times less return on investment than Farmer Bros. But when comparing it to its historical volatility, Kellanova is 19.4 times less risky than Farmer Bros. It trades about 0.13 of its potential returns per unit of risk. Farmer Bros Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 198.00 in Farmer Bros Co on August 28, 2024 and sell it today you would earn a total of 25.00 from holding Farmer Bros Co or generate 12.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kellanova vs. Farmer Bros Co
Performance |
| Timeline |
| Kellanova |
| Farmer Bros |
Kellanova and Farmer Bros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kellanova and Farmer Bros
The main advantage of trading using opposite Kellanova and Farmer Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellanova position performs unexpectedly, Farmer Bros 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 Farmer Bros will offset losses from the drop in Farmer Bros' long position.| Kellanova vs. Bellring Brands LLC | Kellanova vs. Ingredion Incorporated | Kellanova vs. Nomad Foods | Kellanova vs. Simply Good Foods |
| Farmer Bros vs. Bridgford Foods | Farmer Bros vs. Seneca Foods Corp | Farmer Bros vs. Lifeway Foods | Farmer Bros vs. J J Snack |
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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