Correlation Between Grocery Outlet and Kellanova

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

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

Diversification Opportunities for Grocery Outlet and Kellanova

-0.43

Correlation Coefficient

Grocery Outlet  Kellanova

Very good diversification

The 3 months correlation between Grocery and Kellanova is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and Grocery Outlet 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 Grocery Outlet Holding 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 Grocery Outlet i.e., Grocery Outlet and Kellanova go up and down completely randomly.

Pair Corralation between Grocery Outlet and Kellanova

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to generate 22.95 times more return on investment than Kellanova. However, Grocery Outlet is 22.95 times more volatile than Kellanova. It trades about 0.19 of its potential returns per unit of risk. Kellanova is currently generating about 0.1 per unit of risk. If you would invest  1,583  in Grocery Outlet Holding on August 15, 2024 and sell it today you would earn a total of  324.00  from holding Grocery Outlet Holding or generate 20.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Grocery Outlet Holding  vs.  Kellanova

Grocery Outlet Holding

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grocery Outlet Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Grocery Outlet is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Kellanova

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 11 (%) 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 Grocery Outlet and Kellanova

The main advantage of trading using opposite Grocery Outlet and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet 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 Grocery Outlet Holding 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.