Correlation Between Kellanova and Fresh Del

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

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

Diversification Opportunities for Kellanova and Fresh Del

0.62

Correlation Coefficient

Kellanova  Fresh Del

Poor diversification

The 3 months correlation between Kellanova and Fresh is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and Fresh Del Monte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresh Del Monte 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 Fresh Del. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresh Del Monte has no effect on the direction of Kellanova i.e., Kellanova and Fresh Del go up and down completely randomly.

Pair Corralation between Kellanova and Fresh Del

Taking into account the 90-day investment horizon Kellanova is expected to generate 0.15 times more return on investment than Fresh Del. However, Kellanova is 6.68 times less risky than Fresh Del. It trades about 0.1 of its potential returns per unit of risk. Fresh Del Monte is currently generating about -0.06 per unit of risk. If you would invest  8,021  in Kellanova on September 21, 2024 and sell it today you would earn a total of  29.00  from holding Kellanova or generate 0.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Kellanova  vs.  Fresh Del Monte

Kellanova

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 3 (%) 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 current stock price mess, may contribute to short-term losses for the institutional investors.

Fresh Del Monte

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fresh Del Monte are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, Fresh Del reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kellanova and Fresh Del

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

The idea behind Kellanova and Fresh Del Monte 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.