Correlation Between Coca Cola and Kellanova

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

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

Diversification Opportunities for Coca Cola and Kellanova

-0.49

Correlation Coefficient

Coca Cola  Kellanova

Very good diversification

The 3 months correlation between Coca and Kellanova is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding The Coca Cola and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and Coca Cola 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 The Coca Cola are associated (or correlated) with Kellanova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kellanova has no effect on the direction of Coca Cola i.e., Coca Cola and Kellanova go up and down completely randomly.

Pair Corralation between Coca Cola and Kellanova

Allowing for the 90-day total investment horizon The Coca Cola is expected to under-perform the Kellanova. In addition to that, Coca Cola is 4.62 times more volatile than Kellanova. It trades about -0.23 of its total potential returns per unit of risk. Kellanova is currently generating about 0.11 per unit of volatility. If you would invest  8,014  in Kellanova on September 28, 2024 and sell it today you would earn a total of  102.00  from holding Kellanova or generate 1.27% return on investment over 90 days.

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

The Coca Cola  vs.  Kellanova

Coca Cola

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Coca Cola has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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.

Pair Trading with Coca Cola and Kellanova

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

The idea behind The Coca Cola and Kellanova 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.