Correlation Between Glanbia Plc and Kellanova

Can any of the company-specific risk be diversified away by investing in both Glanbia Plc 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 Glanbia Plc and Kellanova into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Glanbia plc and Kellanova, you can compare the effects of market volatilities on Glanbia Plc 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 Glanbia Plc with a short position of Kellanova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glanbia Plc and Kellanova.

Diversification Opportunities for Glanbia Plc and Kellanova

-0.62

Correlation Coefficient

Glanbia Plc  Kellanova

Excellent diversification

The 3 months correlation between Glanbia and Kellanova is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Glanbia plc and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and Glanbia Plc 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 Glanbia plc 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 Glanbia Plc i.e., Glanbia Plc and Kellanova go up and down completely randomly.

Pair Corralation between Glanbia Plc and Kellanova

Assuming the 90 days horizon Glanbia Plc is expected to generate 1.29 times less return on investment than Kellanova. In addition to that, Glanbia Plc is 1.23 times more volatile than Kellanova. It trades about 0.03 of its total potential returns per unit of risk. Kellanova is currently generating about 0.05 per unit of volatility. If you would invest  5,879  in Kellanova on September 19, 2024 and sell it today you would earn a total of  2,180  from holding Kellanova or generate 37.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	71.52%
Values	Daily Returns

Glanbia plc  vs.  Kellanova

Glanbia plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glanbia plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Kellanova

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 4 (%) 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 current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Glanbia Plc and Kellanova

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

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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.