Correlation Between Campbell Soup and General Mills
Can any of the company-specific risk be diversified away by investing in both Campbell Soup 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 Campbell Soup and General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Campbell Soup and General Mills, you can compare the effects of market volatilities on Campbell Soup 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 Campbell Soup with a short position of General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Campbell Soup and General Mills.
Diversification Opportunities for Campbell Soup and General Mills
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Campbell and General is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Campbell Soup and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Campbell Soup 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 Campbell Soup 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 Campbell Soup i.e., Campbell Soup and General Mills go up and down completely randomly.
Pair Corralation between Campbell Soup and General Mills
Considering the 90-day investment horizon Campbell Soup is expected to generate 1.13 times more return on investment than General Mills. However, Campbell Soup is 1.13 times more volatile than General Mills. It trades about -0.02 of its potential returns per unit of risk. General Mills is currently generating about -0.03 per unit of risk. If you would invest 5,315 in Campbell Soup on August 28, 2024 and sell it today you would lose (722.00) from holding Campbell Soup or give up 13.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Campbell Soup vs. General Mills
Performance |
| Timeline |
| Campbell Soup |
| General Mills |
Campbell Soup and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Campbell Soup and General Mills
The main advantage of trading using opposite Campbell Soup and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Campbell Soup 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.| Campbell Soup vs. Bellring Brands LLC | Campbell Soup vs. Ingredion Incorporated | Campbell Soup vs. Nomad Foods | Campbell Soup vs. Simply Good Foods |
| General Mills vs. Campbell Soup | General Mills vs. Kraft Heinz Co | General Mills vs. ConAgra Foods | General Mills vs. Hormel 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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