Correlation Between General Mills and Logista
Can any of the company-specific risk be diversified away by investing in both General Mills and Logista 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 General Mills and Logista into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Mills and Logista, you can compare the effects of market volatilities on General Mills and Logista 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 General Mills with a short position of Logista. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Mills and Logista.
Diversification Opportunities for General Mills and Logista
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between General and Logista is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and Logista in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logista and General Mills 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 General Mills are associated (or correlated) with Logista. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logista has no effect on the direction of General Mills i.e., General Mills and Logista go up and down completely randomly.
Pair Corralation between General Mills and Logista
Assuming the 90 days horizon General Mills is expected to generate 2.56 times more return on investment than Logista. However, General Mills is 2.56 times more volatile than Logista. It trades about 0.17 of its potential returns per unit of risk. Logista is currently generating about 0.41 per unit of risk. If you would invest 8,190 in General Mills on September 1, 2024 and sell it today you would earn a total of 668.00 from holding General Mills or generate 8.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
General Mills vs. Logista
Performance |
| Timeline |
| General Mills |
| Logista |
General Mills and Logista Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Mills and Logista
The main advantage of trading using opposite General Mills and Logista positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills position performs unexpectedly, Logista 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 Logista will offset losses from the drop in Logista's long position.| General Mills vs. INTER CARS SA | General Mills vs. Geely Automobile Holdings | General Mills vs. GEELY AUTOMOBILE | General Mills vs. MCEWEN MINING INC |
| Logista vs. Addus HomeCare | Logista vs. HomeToGo SE | Logista vs. PennantPark Investment | Logista vs. Haier Smart Home |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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