Correlation Between Tootsie Roll and Kellanova

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

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

Diversification Opportunities for Tootsie Roll and Kellanova

0.12

Correlation Coefficient

Tootsie Roll  Kellanova

Average diversification

The 3 months correlation between Tootsie and Kellanova is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Tootsie Roll Industries and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and Tootsie Roll 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 Tootsie Roll Industries 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 Tootsie Roll i.e., Tootsie Roll and Kellanova go up and down completely randomly.

Pair Corralation between Tootsie Roll and Kellanova

Allowing for the 90-day total investment horizon Tootsie Roll is expected to generate 1.09 times less return on investment than Kellanova. In addition to that, Tootsie Roll is 9.53 times more volatile than Kellanova. It trades about 0.03 of its total potential returns per unit of risk. Kellanova is currently generating about 0.29 per unit of volatility. If you would invest  7,979  in Kellanova on December 19, 2024 and sell it today you would earn a total of  256.00  from holding Kellanova or generate 3.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Tootsie Roll Industries  vs.  Kellanova

Tootsie Roll Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tootsie Roll Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Tootsie Roll is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Kellanova

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 23 (%) 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 Tootsie Roll and Kellanova

The main advantage of trading using opposite Tootsie Roll and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tootsie Roll 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 Tootsie Roll Industries 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.