Correlation Between Kellanova and Safety Shot

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

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

Diversification Opportunities for Kellanova and Safety Shot

-0.4

Correlation Coefficient

Kellanova  Safety Shot

Very good diversification

The 3 months correlation between Kellanova and Safety is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and Safety Shot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Shot 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 Safety Shot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Shot has no effect on the direction of Kellanova i.e., Kellanova and Safety Shot go up and down completely randomly.

Pair Corralation between Kellanova and Safety Shot

Taking into account the 90-day investment horizon Kellanova is expected to generate 92.58 times less return on investment than Safety Shot. But when comparing it to its historical volatility, Kellanova is 102.89 times less risky than Safety Shot. It trades about 0.05 of its potential returns per unit of risk. Safety Shot is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  28.00  in Safety Shot on September 21, 2024 and sell it today you would lose (10.00) from holding Safety Shot or give up 35.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.63%
Values	Daily Returns

Kellanova  vs.  Safety Shot

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.

Safety Shot

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Safety Shot are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Safety Shot showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kellanova and Safety Shot

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

The idea behind Kellanova and Safety Shot 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.