Correlation Between CONAGRA and Kontoor Brands

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

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

Diversification Opportunities for CONAGRA and Kontoor Brands

-0.04

Correlation Coefficient

CONAGRA  Kontoor Brands

Good diversification

The 3 months correlation between CONAGRA and Kontoor is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding CONAGRA BRANDS INC and Kontoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontoor Brands and CONAGRA 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 CONAGRA BRANDS INC are associated (or correlated) with Kontoor Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontoor Brands has no effect on the direction of CONAGRA i.e., CONAGRA and Kontoor Brands go up and down completely randomly.

Pair Corralation between CONAGRA and Kontoor Brands

Assuming the 90 days trading horizon CONAGRA is expected to generate 17.63 times less return on investment than Kontoor Brands. But when comparing it to its historical volatility, CONAGRA BRANDS INC is 2.68 times less risky than Kontoor Brands. It trades about 0.02 of its potential returns per unit of risk. Kontoor Brands is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  7,617  in Kontoor Brands on October 24, 2024 and sell it today you would earn a total of  981.00  from holding Kontoor Brands or generate 12.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

CONAGRA BRANDS INC  vs.  Kontoor Brands

CONAGRA BRANDS INC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CONAGRA BRANDS INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CONAGRA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kontoor Brands

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kontoor Brands are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Kontoor Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CONAGRA and Kontoor Brands

The main advantage of trading using opposite CONAGRA and Kontoor Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CONAGRA position performs unexpectedly, Kontoor Brands 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 Kontoor Brands will offset losses from the drop in Kontoor Brands' long position.

The idea behind CONAGRA BRANDS INC and Kontoor Brands 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.