Correlation Between Westrock Coffee and Kellanova

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

Diversification Opportunities for Westrock Coffee and Kellanova

0.18
  Correlation Coefficient

Average diversification

The 3 months correlation between Westrock and Kellanova is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Westrock Coffee and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and Westrock Coffee 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 Westrock Coffee 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 Westrock Coffee i.e., Westrock Coffee and Kellanova go up and down completely randomly.

Pair Corralation between Westrock Coffee and Kellanova

Given the investment horizon of 90 days Westrock Coffee is expected to generate 2.37 times more return on investment than Kellanova. However, Westrock Coffee is 2.37 times more volatile than Kellanova. It trades about 0.06 of its potential returns per unit of risk. Kellanova is currently generating about 0.11 per unit of risk. If you would invest  860.00  in Westrock Coffee on January 20, 2024 and sell it today you would earn a total of  145.00  from holding Westrock Coffee or generate 16.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Westrock Coffee  vs.  Kellanova

 Performance 
       Timeline  
Westrock Coffee 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Westrock Coffee has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Westrock Coffee is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private 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.

Westrock Coffee and Kellanova Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Westrock Coffee and Kellanova

The main advantage of trading using opposite Westrock Coffee and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westrock Coffee 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 Westrock Coffee 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 Stocks Directory module to find actively traded stocks across global markets.

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