Correlation Between Rocky Mountain and Kellanova

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Can any of the company-specific risk be diversified away by investing in both Rocky Mountain 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 Rocky Mountain and Kellanova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocky Mountain Chocolate and Kellanova, you can compare the effects of market volatilities on Rocky Mountain 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 Rocky Mountain with a short position of Kellanova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocky Mountain and Kellanova.

Diversification Opportunities for Rocky Mountain and Kellanova

-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between Rocky and Kellanova is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Mountain Chocolate and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and Rocky Mountain 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 Rocky Mountain Chocolate 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 Rocky Mountain i.e., Rocky Mountain and Kellanova go up and down completely randomly.

Pair Corralation between Rocky Mountain and Kellanova

Given the investment horizon of 90 days Rocky Mountain Chocolate is expected to under-perform the Kellanova. In addition to that, Rocky Mountain is 21.83 times more volatile than Kellanova. It trades about -0.16 of its total potential returns per unit of risk. Kellanova is currently generating about 0.13 per unit of volatility. If you would invest  8,031  in Kellanova on October 25, 2024 and sell it today you would earn a total of  133.00  from holding Kellanova or generate 1.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Rocky Mountain Chocolate  vs.  Kellanova

 Performance 
       Timeline  
Rocky Mountain Chocolate 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Rocky Mountain Chocolate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Kellanova 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 10 (%) 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.

Rocky Mountain and Kellanova Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Rocky Mountain and Kellanova

The main advantage of trading using opposite Rocky Mountain and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocky Mountain 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 Rocky Mountain Chocolate 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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