Correlation Between Kellanova and Westrock Coffee

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

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

Diversification Opportunities for Kellanova and Westrock Coffee

0.21

Correlation Coefficient

Kellanova  Westrock Coffee

Modest diversification

The 3 months correlation between Kellanova and Westrock is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee 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 Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of Kellanova i.e., Kellanova and Westrock Coffee go up and down completely randomly.

Pair Corralation between Kellanova and Westrock Coffee

Taking into account the 90-day investment horizon Kellanova is expected to generate 7.18 times less return on investment than Westrock Coffee. But when comparing it to its historical volatility, Kellanova is 30.12 times less risky than Westrock Coffee. It trades about 0.27 of its potential returns per unit of risk. Westrock Coffee is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  625.00  in Westrock Coffee on December 29, 2024 and sell it today you would earn a total of  83.00  from holding Westrock Coffee or generate 13.28% return on investment over 90 days.

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

Kellanova  vs.  Westrock Coffee

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.

Westrock Coffee

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Westrock Coffee are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Westrock Coffee unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kellanova and Westrock Coffee

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

The idea behind Kellanova and Westrock Coffee 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.