Correlation Between Kellanova and Mondelez International

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

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

Diversification Opportunities for Kellanova and Mondelez International

0.87

Correlation Coefficient

Kellanova  Mondelez International

Very poor diversification

The 3 months correlation between Kellanova and Mondelez is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and Mondelez International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondelez International 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 Mondelez International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondelez International has no effect on the direction of Kellanova i.e., Kellanova and Mondelez International go up and down completely randomly.

Pair Corralation between Kellanova and Mondelez International

Taking into account the 90-day investment horizon Kellanova is expected to generate 5.33 times less return on investment than Mondelez International. But when comparing it to its historical volatility, Kellanova is 9.78 times less risky than Mondelez International. It trades about 0.27 of its potential returns per unit of risk. Mondelez International is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  5,909  in Mondelez International on December 29, 2024 and sell it today you would earn a total of  863.00  from holding Mondelez International or generate 14.6% return on investment over 90 days.

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

Kellanova  vs.  Mondelez International

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.

Mondelez International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mondelez International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Mondelez International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kellanova and Mondelez International

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

The idea behind Kellanova and Mondelez International 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.