Correlation Between Kellanova and Campbell Soup

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

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

Diversification Opportunities for Kellanova and Campbell Soup

-0.24

Correlation Coefficient

Kellanova  Campbell Soup

Very good diversification

The 3 months correlation between Kellanova and Campbell is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and Campbell Soup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Campbell Soup 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 Campbell Soup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Campbell Soup has no effect on the direction of Kellanova i.e., Kellanova and Campbell Soup go up and down completely randomly.

Pair Corralation between Kellanova and Campbell Soup

Taking into account the 90-day investment horizon Kellanova is expected to generate 0.09 times more return on investment than Campbell Soup. However, Kellanova is 11.64 times less risky than Campbell Soup. It trades about 0.27 of its potential returns per unit of risk. Campbell Soup is currently generating about -0.02 per unit of risk. If you would invest  8,026  in Kellanova on December 30, 2024 and sell it today you would earn a total of  221.00  from holding Kellanova or generate 2.75% return on investment over 90 days.

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

Kellanova  vs.  Campbell Soup

Kellanova

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 21 (%) 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.

Campbell Soup

Risk-Adjusted Performance

Very Weak

Over the last 90 days Campbell Soup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Campbell Soup is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kellanova and Campbell Soup

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

The idea behind Kellanova and Campbell Soup 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.