Correlation Between Kellanova and JBS SA

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

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

Diversification Opportunities for Kellanova and JBS SA

-0.34

Correlation Coefficient

Kellanova  JBS SA

Very good diversification

The 3 months correlation between Kellanova and JBS is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova and JBS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JBS SA and Kellanova 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 Kellanova are associated (or correlated) with JBS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JBS SA has no effect on the direction of Kellanova i.e., Kellanova and JBS SA go up and down completely randomly.

Pair Corralation between Kellanova and JBS SA

Taking into account the 90-day investment horizon Kellanova is expected to generate 6.31 times less return on investment than JBS SA. But when comparing it to its historical volatility, Kellanova is 1.4 times less risky than JBS SA. It trades about 0.01 of its potential returns per unit of risk. JBS SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  793.00  in JBS SA on February 7, 2024 and sell it today you would earn a total of  152.00  from holding JBS SA or generate 19.17% return on investment over 90 days.

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

Kellanova  vs.  JBS SA

Kellanova

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Kellanova may actually be approaching a critical reversion point that can send shares even higher in June 2024.

JBS SA

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days JBS SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, JBS SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kellanova and JBS SA

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

The idea behind Kellanova and JBS SA 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.