Correlation Between Kellanova and Blue Star

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

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

Diversification Opportunities for Kellanova and Blue Star

-0.69

Correlation Coefficient

Kellanova  Blue Star

Excellent diversification

The 3 months correlation between Kellanova and Blue is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and Blue Star Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Star Foods 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 Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Star Foods has no effect on the direction of Kellanova i.e., Kellanova and Blue Star go up and down completely randomly.

Pair Corralation between Kellanova and Blue Star

Taking into account the 90-day investment horizon Kellanova is expected to generate 0.02 times more return on investment than Blue Star. However, Kellanova is 57.09 times less risky than Blue Star. It trades about 0.11 of its potential returns per unit of risk. Blue Star Foods is currently generating about -0.13 per unit of risk. If you would invest  7,963  in Kellanova on September 4, 2024 and sell it today you would earn a total of  107.00  from holding Kellanova or generate 1.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Kellanova  vs.  Blue Star Foods

Kellanova

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 8 (%) 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 Star Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Star Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Kellanova and Blue Star

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

The idea behind Kellanova and Blue Star Foods 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.