Correlation Between United Natural and Kellanova

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

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

Diversification Opportunities for United Natural and Kellanova

0.78

Correlation Coefficient

United Natural  Kellanova

Poor diversification

The 3 months correlation between United and Kellanova is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and United Natural 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 United Natural Foods 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 United Natural i.e., United Natural and Kellanova go up and down completely randomly.

Pair Corralation between United Natural and Kellanova

Given the investment horizon of 90 days United Natural Foods is expected to under-perform the Kellanova. In addition to that, United Natural is 2.88 times more volatile than Kellanova. It trades about 0.0 of its total potential returns per unit of risk. Kellanova is currently generating about 0.06 per unit of volatility. If you would invest  5,668  in Kellanova on October 10, 2024 and sell it today you would earn a total of  2,467  from holding Kellanova or generate 43.53% return on investment over 90 days.

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

United Natural Foods  vs.  Kellanova

United Natural Foods

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Natural Foods are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, United Natural demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Kellanova

Risk-Adjusted Performance

10 of 100

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.

Pair Trading with United Natural and Kellanova

The main advantage of trading using opposite United Natural and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural 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 United Natural Foods 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.