Correlation Between General Mills and Kraft Heinz
Can any of the company-specific risk be diversified away by investing in both General Mills and Kraft Heinz 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 Kraft Heinz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Mills and Kraft Heinz Co, you can compare the effects of market volatilities on General Mills and Kraft Heinz 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 Kraft Heinz. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Mills and Kraft Heinz.
Diversification Opportunities for General Mills and Kraft Heinz
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between General and Kraft is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and Kraft Heinz Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Heinz 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 Kraft Heinz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraft Heinz has no effect on the direction of General Mills i.e., General Mills and Kraft Heinz go up and down completely randomly.
Pair Corralation between General Mills and Kraft Heinz
Assuming the 90 days horizon General Mills is expected to generate 1.22 times more return on investment than Kraft Heinz. However, General Mills is 1.22 times more volatile than Kraft Heinz Co. It trades about 0.11 of its potential returns per unit of risk. Kraft Heinz Co is currently generating about -0.01 per unit of risk. If you would invest 6,459 in General Mills on September 1, 2024 and sell it today you would earn a total of 2,399 from holding General Mills or generate 37.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Mills vs. Kraft Heinz Co
Performance |
| Timeline |
| General Mills |
| Kraft Heinz |
General Mills and Kraft Heinz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Mills and Kraft Heinz
The main advantage of trading using opposite General Mills and Kraft Heinz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills position performs unexpectedly, Kraft Heinz 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 Kraft Heinz will offset losses from the drop in Kraft Heinz'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 |
| Kraft Heinz vs. Danone SA | Kraft Heinz vs. Superior Plus Corp | Kraft Heinz vs. NMI Holdings | Kraft Heinz 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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