Correlation Between Japan Post and General Mills
Can any of the company-specific risk be diversified away by investing in both Japan Post and General Mills 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 Japan Post and General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Post Insurance and General Mills, you can compare the effects of market volatilities on Japan Post and General Mills 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 Japan Post with a short position of General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Post and General Mills.
Diversification Opportunities for Japan Post and General Mills
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Japan and General is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Japan Post Insurance and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Japan Post 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 Japan Post Insurance are associated (or correlated) with General Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Mills has no effect on the direction of Japan Post i.e., Japan Post and General Mills go up and down completely randomly.
Pair Corralation between Japan Post and General Mills
Assuming the 90 days trading horizon Japan Post Insurance is expected to generate 0.91 times more return on investment than General Mills. However, Japan Post Insurance is 1.1 times less risky than General Mills. It trades about 0.03 of its potential returns per unit of risk. General Mills is currently generating about -0.17 per unit of risk. If you would invest 1,750 in Japan Post Insurance on October 24, 2024 and sell it today you would earn a total of 10.00 from holding Japan Post Insurance or generate 0.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Japan Post Insurance vs. General Mills
Performance |
| Timeline |
| Japan Post Insurance |
| General Mills |
Japan Post and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Post and General Mills
The main advantage of trading using opposite Japan Post and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Post position performs unexpectedly, General Mills 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 General Mills will offset losses from the drop in General Mills' long position.| Japan Post vs. GAMING FAC SA | Japan Post vs. Games Workshop Group | Japan Post vs. Boyd Gaming | Japan Post vs. QINGCI GAMES INC |
| General Mills vs. CNVISION MEDIA | General Mills vs. GungHo Online Entertainment | General Mills vs. Tencent Music Entertainment | General Mills vs. TreeHouse Foods |
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 Stocks Directory module to find actively traded stocks across global markets.
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