Correlation Between McCormick Company and Kellanova

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

Diversification Opportunities for McCormick Company and Kellanova

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between McCormick and Kellanova is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding McCormick Company Incorporated and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and McCormick Company 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 McCormick Company Incorporated 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 McCormick Company i.e., McCormick Company and Kellanova go up and down completely randomly.

Pair Corralation between McCormick Company and Kellanova

Considering the 90-day investment horizon McCormick Company Incorporated is expected to generate 2.24 times more return on investment than Kellanova. However, McCormick Company is 2.24 times more volatile than Kellanova. It trades about 0.22 of its potential returns per unit of risk. Kellanova is currently generating about 0.12 per unit of risk. If you would invest  6,784  in McCormick Company Incorporated on December 29, 2023 and sell it today you would earn a total of  819.00  from holding McCormick Company Incorporated or generate 12.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

McCormick Company Incorporated  vs.  Kellanova

 Performance 
       Timeline  
McCormick rporated 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in McCormick Company Incorporated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting forward-looking signals, McCormick Company may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Kellanova 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 1 (%) 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.

McCormick Company and Kellanova Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with McCormick Company and Kellanova

The main advantage of trading using opposite McCormick Company and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McCormick Company 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 McCormick Company Incorporated 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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