Correlation Between Kellanova and Investec
Can any of the company-specific risk be diversified away by investing in both Kellanova and Investec 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 Investec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kellanova and Investec Group, you can compare the effects of market volatilities on Kellanova and Investec 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 Investec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellanova and Investec.
Diversification Opportunities for Kellanova and Investec
Poor diversification
The 3 months correlation between Kellanova and Investec is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and Investec Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Group 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 Investec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Group has no effect on the direction of Kellanova i.e., Kellanova and Investec go up and down completely randomly.
Pair Corralation between Kellanova and Investec
Taking into account the 90-day investment horizon Kellanova is expected to generate 3.65 times more return on investment than Investec. However, Kellanova is 3.65 times more volatile than Investec Group. It trades about 0.06 of its potential returns per unit of risk. Investec Group is currently generating about 0.09 per unit of risk. If you would invest 5,880 in Kellanova on October 13, 2024 and sell it today you would earn a total of 2,271 from holding Kellanova or generate 38.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Kellanova vs. Investec Group
Performance |
| Timeline |
| Kellanova |
| Investec Group |
Kellanova and Investec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kellanova and Investec
The main advantage of trading using opposite Kellanova and Investec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellanova position performs unexpectedly, Investec 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 Investec will offset losses from the drop in Investec's long position.| Kellanova vs. Campbell Soup | Kellanova vs. ConAgra Foods | Kellanova vs. Hormel Foods | Kellanova vs. Kraft Heinz Co |
| Investec vs. Albertsons Companies | Investec vs. First Watch Restaurant | Investec vs. United Natural Foods | Investec vs. Kellanova |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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