Correlation Between General Mills and Estée Lauder
Can any of the company-specific risk be diversified away by investing in both General Mills and Estée Lauder 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 Estée Lauder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Mills and The Este Lauder, you can compare the effects of market volatilities on General Mills and Estée Lauder 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 Estée Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Mills and Estée Lauder.
Diversification Opportunities for General Mills and Estée Lauder
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between General and Estée is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and The Este Lauder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Estée Lauder 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 Estée Lauder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Estée Lauder has no effect on the direction of General Mills i.e., General Mills and Estée Lauder go up and down completely randomly.
Pair Corralation between General Mills and Estée Lauder
Assuming the 90 days horizon General Mills is expected to generate 0.51 times more return on investment than Estée Lauder. However, General Mills is 1.98 times less risky than Estée Lauder. It trades about 0.32 of its potential returns per unit of risk. The Este Lauder is currently generating about -0.11 per unit of risk. If you would invest 9,097 in General Mills on November 28, 2024 and sell it today you would earn a total of 1,439 from holding General Mills or generate 15.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Mills vs. The Este Lauder
Performance |
| Timeline |
| General Mills |
| Estée Lauder |
General Mills and Estée Lauder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Mills and Estée Lauder
The main advantage of trading using opposite General Mills and Estée Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills position performs unexpectedly, Estée Lauder 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 Estée Lauder will offset losses from the drop in Estée Lauder's long position.| General Mills vs. Gladstone Investment | General Mills vs. STRAYER EDUCATION | General Mills vs. Tamburi Investment Partners | General Mills vs. CHRYSALIS INVESTMENTS LTD |
| Estée Lauder vs. AGNC Investment Corp | Estée Lauder vs. Grupo Carso SAB | Estée Lauder vs. CHRYSALIS INVESTMENTS LTD | Estée Lauder vs. CARSALESCOM |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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