Correlation Between Kontoor Brands and CONAGRA

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

By analyzing existing cross correlation between Kontoor Brands and CONAGRA BRANDS INC, you can compare the effects of market volatilities on Kontoor Brands and CONAGRA 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 Kontoor Brands with a short position of CONAGRA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kontoor Brands and CONAGRA.

Diversification Opportunities for Kontoor Brands and CONAGRA

-0.04

Correlation Coefficient

Kontoor Brands  CONAGRA

Good diversification

The 3 months correlation between Kontoor and CONAGRA is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Kontoor Brands and CONAGRA BRANDS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONAGRA BRANDS INC and Kontoor Brands 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 Kontoor Brands are associated (or correlated) with CONAGRA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONAGRA BRANDS INC has no effect on the direction of Kontoor Brands i.e., Kontoor Brands and CONAGRA go up and down completely randomly.

Pair Corralation between Kontoor Brands and CONAGRA

Considering the 90-day investment horizon Kontoor Brands is expected to under-perform the CONAGRA. In addition to that, Kontoor Brands is 1.06 times more volatile than CONAGRA BRANDS INC. It trades about -0.03 of its total potential returns per unit of risk. CONAGRA BRANDS INC is currently generating about 0.17 per unit of volatility. If you would invest  9,409  in CONAGRA BRANDS INC on October 24, 2024 and sell it today you would earn a total of  326.00  from holding CONAGRA BRANDS INC or generate 3.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

Kontoor Brands  vs.  CONAGRA BRANDS INC

Kontoor Brands

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kontoor Brands are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Kontoor Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

CONAGRA BRANDS INC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CONAGRA BRANDS INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CONAGRA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kontoor Brands and CONAGRA

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

The idea behind Kontoor Brands and CONAGRA BRANDS INC 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.