Correlation Between Kellanova and MGP Ingredients
Can any of the company-specific risk be diversified away by investing in both Kellanova and MGP Ingredients 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 MGP Ingredients into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kellanova and MGP Ingredients, you can compare the effects of market volatilities on Kellanova and MGP Ingredients 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 MGP Ingredients. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellanova and MGP Ingredients.
Diversification Opportunities for Kellanova and MGP Ingredients
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kellanova and MGP is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and MGP Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGP Ingredients 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 MGP Ingredients. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGP Ingredients has no effect on the direction of Kellanova i.e., Kellanova and MGP Ingredients go up and down completely randomly.
Pair Corralation between Kellanova and MGP Ingredients
Taking into account the 90-day investment horizon Kellanova is expected to generate 0.05 times more return on investment than MGP Ingredients. However, Kellanova is 21.25 times less risky than MGP Ingredients. It trades about 0.1 of its potential returns per unit of risk. MGP Ingredients is currently generating about -0.23 per unit of risk. If you would invest 8,016 in Kellanova on August 31, 2024 and sell it today you would earn a total of 99.00 from holding Kellanova or generate 1.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kellanova vs. MGP Ingredients
Performance |
| Timeline |
| Kellanova |
| MGP Ingredients |
Kellanova and MGP Ingredients Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kellanova and MGP Ingredients
The main advantage of trading using opposite Kellanova and MGP Ingredients positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellanova position performs unexpectedly, MGP Ingredients 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 MGP Ingredients will offset losses from the drop in MGP Ingredients' long position.| Kellanova vs. Campbell Soup | Kellanova vs. ConAgra Foods | Kellanova vs. Hormel Foods | Kellanova vs. Kraft Heinz Co |
| MGP Ingredients vs. Brown Forman | MGP Ingredients vs. Diageo PLC ADR | MGP Ingredients vs. Brown Forman | MGP Ingredients vs. Constellation Brands Class |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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