Correlation Between Beyond Oil and General Mills
Can any of the company-specific risk be diversified away by investing in both Beyond Oil 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 Beyond Oil and General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beyond Oil and General Mills, you can compare the effects of market volatilities on Beyond Oil 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 Beyond Oil with a short position of General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beyond Oil and General Mills.
Diversification Opportunities for Beyond Oil and General Mills
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Beyond and General is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Oil and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Beyond Oil 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 Beyond Oil 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 Beyond Oil i.e., Beyond Oil and General Mills go up and down completely randomly.
Pair Corralation between Beyond Oil and General Mills
Assuming the 90 days horizon Beyond Oil is expected to generate 2.11 times more return on investment than General Mills. However, Beyond Oil is 2.11 times more volatile than General Mills. It trades about 0.06 of its potential returns per unit of risk. General Mills is currently generating about -0.25 per unit of risk. If you would invest 107.00 in Beyond Oil on August 24, 2024 and sell it today you would earn a total of 3.00 from holding Beyond Oil or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beyond Oil vs. General Mills
Performance |
| Timeline |
| Beyond Oil |
| General Mills |
Beyond Oil and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beyond Oil and General Mills
The main advantage of trading using opposite Beyond Oil and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beyond Oil 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.| Beyond Oil vs. Legacy Education | Beyond Oil vs. NVIDIA | Beyond Oil vs. Apple Inc | Beyond Oil vs. Microsoft |
| General Mills vs. Better Choice | General Mills vs. BioAdaptives | General Mills vs. Beyond Oil | General Mills vs. Bon Natural Life |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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