Correlation Between Kellanova and BRC

Can any of the company-specific risk be diversified away by investing in both Kellanova and BRC 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 BRC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kellanova and BRC Inc, you can compare the effects of market volatilities on Kellanova and BRC 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 BRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellanova and BRC.

Diversification Opportunities for Kellanova and BRC

-0.45

Correlation Coefficient

Kellanova  BRC

Very good diversification

The 3 months correlation between Kellanova and BRC is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and BRC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRC Inc 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 BRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRC Inc has no effect on the direction of Kellanova i.e., Kellanova and BRC go up and down completely randomly.

Pair Corralation between Kellanova and BRC

Taking into account the 90-day investment horizon Kellanova is expected to generate 0.32 times more return on investment than BRC. However, Kellanova is 3.13 times less risky than BRC. It trades about 0.12 of its potential returns per unit of risk. BRC Inc is currently generating about 0.01 per unit of risk. If you would invest  5,215  in Kellanova on September 13, 2024 and sell it today you would earn a total of  2,855  from holding Kellanova or generate 54.75% 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.  BRC Inc

Kellanova

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Kellanova is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

BRC Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRC Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, BRC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kellanova and BRC

The main advantage of trading using opposite Kellanova and BRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellanova position performs unexpectedly, BRC 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 BRC will offset losses from the drop in BRC's long position.

The idea behind Kellanova and BRC Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.