Correlation Between ConAgra Foods and Kellanova

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Can any of the company-specific risk be diversified away by investing in both ConAgra Foods 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 ConAgra Foods and Kellanova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ConAgra Foods and Kellanova, you can compare the effects of market volatilities on ConAgra Foods 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 ConAgra Foods with a short position of Kellanova. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConAgra Foods and Kellanova.

Diversification Opportunities for ConAgra Foods and Kellanova

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between ConAgra and Kellanova is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding ConAgra Foods and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and ConAgra Foods 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 ConAgra Foods 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 ConAgra Foods i.e., ConAgra Foods and Kellanova go up and down completely randomly.

Pair Corralation between ConAgra Foods and Kellanova

Considering the 90-day investment horizon ConAgra Foods is expected to generate 1.04 times more return on investment than Kellanova. However, ConAgra Foods is 1.04 times more volatile than Kellanova. It trades about 0.01 of its potential returns per unit of risk. Kellanova is currently generating about 0.01 per unit of risk. If you would invest  3,027  in ConAgra Foods on February 17, 2024 and sell it today you would earn a total of  46.00  from holding ConAgra Foods or generate 1.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

ConAgra Foods  vs.  Kellanova

 Performance 
       Timeline  
ConAgra Foods 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ConAgra Foods are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, ConAgra Foods may actually be approaching a critical reversion point that can send shares even higher in June 2024.
Kellanova 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile forward-looking signals, Kellanova may actually be approaching a critical reversion point that can send shares even higher in June 2024.

ConAgra Foods and Kellanova Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ConAgra Foods and Kellanova

The main advantage of trading using opposite ConAgra Foods and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ConAgra Foods 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 ConAgra Foods 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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