Correlation Between Amphenol and Kellanova
Can any of the company-specific risk be diversified away by investing in both Amphenol and Kellanova 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 Amphenol and Kellanova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amphenol and Kellanova, you can compare the effects of market volatilities on Amphenol and Kellanova 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 Amphenol with a short position of Kellanova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amphenol and Kellanova.
Diversification Opportunities for Amphenol and Kellanova
Very weak diversification
The 3 months correlation between Amphenol and Kellanova is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Amphenol and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and Amphenol 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 Amphenol are associated (or correlated) with Kellanova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kellanova has no effect on the direction of Amphenol i.e., Amphenol and Kellanova go up and down completely randomly.
Pair Corralation between Amphenol and Kellanova
Considering the 90-day investment horizon Amphenol is expected to generate 1.35 times more return on investment than Kellanova. However, Amphenol is 1.35 times more volatile than Kellanova. It trades about 0.16 of its potential returns per unit of risk. Kellanova is currently generating about 0.04 per unit of risk. If you would invest 11,535 in Amphenol on January 28, 2024 and sell it today you would earn a total of 514.00 from holding Amphenol or generate 4.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Amphenol vs. Kellanova
Performance |
Timeline |
Amphenol |
Kellanova |
Amphenol and Kellanova Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amphenol and Kellanova
The main advantage of trading using opposite Amphenol and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amphenol position performs unexpectedly, Kellanova 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 Kellanova will offset losses from the drop in Kellanova's long position.The idea behind Amphenol and Kellanova 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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