Correlation Between General Mills and Metro AG
Can any of the company-specific risk be diversified away by investing in both General Mills and Metro AG 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 Metro AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Mills and Metro AG, you can compare the effects of market volatilities on General Mills and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Mills and Metro AG.
Diversification Opportunities for General Mills and Metro AG
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between General and Metro is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of General Mills i.e., General Mills and Metro AG go up and down completely randomly.
Pair Corralation between General Mills and Metro AG
Assuming the 90 days horizon General Mills is expected to generate 0.9 times more return on investment than Metro AG. However, General Mills is 1.12 times less risky than Metro AG. It trades about 0.02 of its potential returns per unit of risk. Metro AG is currently generating about -0.06 per unit of risk. If you would invest 7,748 in General Mills on August 29, 2024 and sell it today you would earn a total of 947.00 from holding General Mills or generate 12.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Mills vs. Metro AG
Performance |
| Timeline |
| General Mills |
| Metro AG |
General Mills and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Mills and Metro AG
The main advantage of trading using opposite General Mills and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| General Mills vs. United States Steel | General Mills vs. NTG Nordic Transport | General Mills vs. LEGACY IRON ORE | General Mills vs. USWE SPORTS AB |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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