Correlation Between Empire State and General Mills
Can any of the company-specific risk be diversified away by investing in both Empire State 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 Empire State and General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire State Realty and General Mills, you can compare the effects of market volatilities on Empire State 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 Empire State with a short position of General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and General Mills.
Diversification Opportunities for Empire State and General Mills
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Empire and General is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Empire State 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 Empire State Realty 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 Empire State i.e., Empire State and General Mills go up and down completely randomly.
Pair Corralation between Empire State and General Mills
Given the investment horizon of 90 days Empire State Realty is expected to generate 1.28 times more return on investment than General Mills. However, Empire State is 1.28 times more volatile than General Mills. It trades about 0.05 of its potential returns per unit of risk. General Mills is currently generating about 0.04 per unit of risk. If you would invest 956.00 in Empire State Realty on September 1, 2024 and sell it today you would earn a total of 140.00 from holding Empire State Realty or generate 14.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.92% |
| Values | Daily Returns |
Empire State Realty vs. General Mills
Performance |
| Timeline |
| Empire State Realty |
| General Mills |
Empire State and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and General Mills
The main advantage of trading using opposite Empire State and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State 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.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| General Mills vs. Danone SA | General Mills vs. Superior Plus Corp | General Mills vs. NMI Holdings | General Mills vs. Origin Agritech |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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