Correlation Between Kellanova and Blue Ocean

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

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

Diversification Opportunities for Kellanova and Blue Ocean

-0.33

Correlation Coefficient

Kellanova  Blue Ocean

Very good diversification

The 3 months correlation between Kellanova and Blue is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and Blue Ocean Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Ocean Acquisition and Kellanova 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 Kellanova are associated (or correlated) with Blue Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Ocean Acquisition has no effect on the direction of Kellanova i.e., Kellanova and Blue Ocean go up and down completely randomly.

Pair Corralation between Kellanova and Blue Ocean

Taking into account the 90-day investment horizon Kellanova is expected to generate 3.36 times less return on investment than Blue Ocean. But when comparing it to its historical volatility, Kellanova is 23.22 times less risky than Blue Ocean. It trades about 0.14 of its potential returns per unit of risk. Blue Ocean Acquisition is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,131  in Blue Ocean Acquisition on October 25, 2024 and sell it today you would lose (5.00) from holding Blue Ocean Acquisition or give up 0.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	51.67%
Values	Daily Returns

Kellanova  vs.  Blue Ocean Acquisition

Kellanova

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 10 (%) 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.

Blue Ocean Acquisition

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Kellanova and Blue Ocean

The main advantage of trading using opposite Kellanova and Blue Ocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellanova position performs unexpectedly, Blue Ocean 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 Blue Ocean will offset losses from the drop in Blue Ocean's long position.

The idea behind Kellanova and Blue Ocean Acquisition 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.