Correlation Between Kellanova and BG Foods
Can any of the company-specific risk be diversified away by investing in both Kellanova and BG Foods 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 BG Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kellanova and BG Foods, you can compare the effects of market volatilities on Kellanova and BG Foods 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 BG Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellanova and BG Foods.
Diversification Opportunities for Kellanova and BG Foods
Modest diversification
The 3 months correlation between Kellanova and BGS is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and BG Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods 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 BG Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Foods has no effect on the direction of Kellanova i.e., Kellanova and BG Foods go up and down completely randomly.
Pair Corralation between Kellanova and BG Foods
Taking into account the 90-day investment horizon Kellanova is expected to generate 1.93 times less return on investment than BG Foods. But when comparing it to its historical volatility, Kellanova is 1.75 times less risky than BG Foods. It trades about 0.07 of its potential returns per unit of risk. BG Foods is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,038 in BG Foods on January 18, 2024 and sell it today you would earn a total of 26.00 from holding BG Foods or generate 2.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kellanova vs. BG Foods
Performance |
| Timeline |
| Kellanova |
| BG Foods |
Kellanova and BG Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kellanova and BG Foods
The main advantage of trading using opposite Kellanova and BG Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellanova position performs unexpectedly, BG Foods 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 BG Foods will offset losses from the drop in BG Foods' long position.| Kellanova vs. Seneca Foods Corp | Kellanova vs. Central Garden Pet | Kellanova vs. Central Garden Pet | Kellanova vs. Aryzta AG PK |
| BG Foods vs. Seneca Foods Corp | BG Foods vs. Central Garden Pet | BG Foods vs. Central Garden Pet | BG Foods vs. Aryzta AG PK |
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 CEOs Directory module to screen CEOs from public companies around the world.
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