Correlation Between Farmer Bros and Kellanova
Can any of the company-specific risk be diversified away by investing in both Farmer Bros 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 Farmer Bros and Kellanova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmer Bros Co and Kellanova, you can compare the effects of market volatilities on Farmer Bros 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 Farmer Bros with a short position of Kellanova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmer Bros and Kellanova.
Diversification Opportunities for Farmer Bros and Kellanova
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Farmer and Kellanova is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Farmer Bros Co and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and Farmer Bros 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 Farmer Bros Co 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 Farmer Bros i.e., Farmer Bros and Kellanova go up and down completely randomly.
Pair Corralation between Farmer Bros and Kellanova
Given the investment horizon of 90 days Farmer Bros Co is expected to under-perform the Kellanova. In addition to that, Farmer Bros is 2.07 times more volatile than Kellanova. It trades about -0.15 of its total potential returns per unit of risk. Kellanova is currently generating about 0.21 per unit of volatility. If you would invest 5,565 in Kellanova on January 23, 2024 and sell it today you would earn a total of 233.00 from holding Kellanova or generate 4.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmer Bros Co vs. Kellanova
Performance |
| Timeline |
| Farmer Bros |
| Kellanova |
Farmer Bros and Kellanova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmer Bros and Kellanova
The main advantage of trading using opposite Farmer Bros and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmer Bros 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.| Farmer Bros vs. Bunge Limited | Farmer Bros vs. Archer Daniels Midland | Farmer Bros vs. Fresh Del Monte | Farmer Bros vs. Limoneira Co |
| Kellanova vs. Bunge Limited | Kellanova vs. Archer Daniels Midland | Kellanova vs. Fresh Del Monte | Kellanova vs. Limoneira Co |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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