Correlation Between M Dias and Kellanova

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

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

Diversification Opportunities for M Dias and Kellanova

-0.89

Correlation Coefficient

M Dias  Kellanova

Pay attention - limited upside

The 3 months correlation between MDIA3 and Kellanova is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding M Dias Branco and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and M Dias 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 M Dias Branco 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 M Dias i.e., M Dias and Kellanova go up and down completely randomly.

Pair Corralation between M Dias and Kellanova

Assuming the 90 days trading horizon M Dias Branco is expected to under-perform the Kellanova. In addition to that, M Dias is 2.88 times more volatile than Kellanova. It trades about -0.27 of its total potential returns per unit of risk. Kellanova is currently generating about 0.21 per unit of volatility. If you would invest  24,240  in Kellanova on October 6, 2024 and sell it today you would earn a total of  750.00  from holding Kellanova or generate 3.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

M Dias Branco  vs.  Kellanova

M Dias Branco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days M Dias Branco 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 comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Kellanova

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Kellanova sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with M Dias and Kellanova

The main advantage of trading using opposite M Dias and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M Dias 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 M Dias Branco 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.

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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.