Correlation Between Borealis Foods and Kellanova
Can any of the company-specific risk be diversified away by investing in both Borealis 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 Borealis Foods and Kellanova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Borealis Foods and Kellanova, you can compare the effects of market volatilities on Borealis 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 Borealis Foods with a short position of Kellanova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Borealis Foods and Kellanova.
Diversification Opportunities for Borealis Foods and Kellanova
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Borealis and Kellanova is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Borealis Foods and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and Borealis 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 Borealis 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 Borealis Foods i.e., Borealis Foods and Kellanova go up and down completely randomly.
Pair Corralation between Borealis Foods and Kellanova
Assuming the 90 days horizon Borealis Foods is expected to generate 31.16 times more return on investment than Kellanova. However, Borealis Foods is 31.16 times more volatile than Kellanova. It trades about 0.17 of its potential returns per unit of risk. Kellanova is currently generating about 0.11 per unit of risk. If you would invest 6.52 in Borealis Foods on October 21, 2024 and sell it today you would earn a total of 4.48 from holding Borealis Foods or generate 68.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 95.16% |
Values | Daily Returns |
Borealis Foods vs. Kellanova
Performance |
Timeline |
Borealis Foods |
Kellanova |
Borealis Foods and Kellanova Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Borealis Foods and Kellanova
The main advantage of trading using opposite Borealis Foods and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Borealis 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.Borealis Foods vs. National Vision Holdings | Borealis Foods vs. Viemed Healthcare | Borealis Foods vs. Neogen | Borealis Foods vs. Group 1 Automotive |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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