Correlation Between NVIDIA and Kellanova

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

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

Diversification Opportunities for NVIDIA and Kellanova

-0.44

Correlation Coefficient

NVIDIA  Kellanova

Very good diversification

The 3 months correlation between NVIDIA and Kellanova is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and NVIDIA 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 NVIDIA 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 NVIDIA i.e., NVIDIA and Kellanova go up and down completely randomly.

Pair Corralation between NVIDIA and Kellanova

Given the investment horizon of 90 days NVIDIA is expected to generate 7.35 times more return on investment than Kellanova. However, NVIDIA is 7.35 times more volatile than Kellanova. It trades about -0.02 of its potential returns per unit of risk. Kellanova is currently generating about -0.47 per unit of risk. If you would invest  13,967  in NVIDIA on October 22, 2024 and sell it today you would lose (196.00) from holding NVIDIA or give up 1.4% of portfolio value over 90 days.

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

NVIDIA  vs.  Kellanova

NVIDIA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NVIDIA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, NVIDIA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Kellanova

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Kellanova may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with NVIDIA and Kellanova

The main advantage of trading using opposite NVIDIA and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA 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 NVIDIA 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.