Correlation Between Archer Daniels and Kellanova

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

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

Diversification Opportunities for Archer Daniels and Kellanova

-0.13

Correlation Coefficient

Archer Daniels  Kellanova

Good diversification

The @@bw1eo months correlation between Archer and Kellanova is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Archer Daniels Midland and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and Archer Daniels 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 Archer Daniels Midland 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 Archer Daniels i.e., Archer Daniels and Kellanova go up and down completely randomly.

Pair Corralation between Archer Daniels and Kellanova

Considering the 90-day investment horizon Archer Daniels Midland is expected to under-perform the Kellanova. In addition to that, Archer Daniels is 1.63 times more volatile than Kellanova. It trades about -0.03 of its total potential returns per unit of risk. Kellanova is currently generating about -0.01 per unit of volatility. If you would invest  6,475  in Kellanova on February 3, 2024 and sell it today you would lose (424.00) from holding Kellanova or give up 6.55% of portfolio value over 90 days.

Time Period	@@bw1EO Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Archer Daniels Midland  vs.  Kellanova

Archer Daniels Midland

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Archer Daniels Midland has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Kellanova

Risk-Adjusted Performance

15 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain forward-looking signals, Kellanova disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Archer Daniels and Kellanova

The main advantage of trading using opposite Archer Daniels and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archer Daniels 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 Archer Daniels Midland 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.