Correlation Between Merck and Kellanova

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Merck 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 Merck and Kellanova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Kellanova, you can compare the effects of market volatilities on Merck 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 Merck with a short position of Kellanova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Kellanova.

Diversification Opportunities for Merck and Kellanova

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Merck and Kellanova is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and Merck 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 Merck Company 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 Merck i.e., Merck and Kellanova go up and down completely randomly.

Pair Corralation between Merck and Kellanova

Considering the 90-day investment horizon Merck is expected to generate 1.97 times less return on investment than Kellanova. In addition to that, Merck is 1.27 times more volatile than Kellanova. It trades about 0.05 of its total potential returns per unit of risk. Kellanova is currently generating about 0.12 per unit of volatility. If you would invest  5,514  in Kellanova on January 20, 2024 and sell it today you would earn a total of  140.00  from holding Kellanova or generate 2.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Merck Company  vs.  Kellanova

 Performance 
       Timeline  
Merck Company 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Merck Company are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Merck is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.
Kellanova 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 5 (%) 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 recent stock price mess, may contribute to short-term losses for the institutional investors.

Merck and Kellanova Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Merck and Kellanova

The main advantage of trading using opposite Merck and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck 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 Merck Company 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.

Other Complementary Tools

Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Economic Indicators
Top statistical indicators that provide insights into how an economy is performing
Share Portfolio
Track or share privately all of your investments from the convenience of any device
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Commodity Channel
Use Commodity Channel Index to analyze current equity momentum
Headlines Timeline
Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities