Correlation Between General Mills and TOWA
Can any of the company-specific risk be diversified away by investing in both General Mills and TOWA 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 TOWA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Mills and TOWA Corporation, you can compare the effects of market volatilities on General Mills and TOWA 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 TOWA. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Mills and TOWA.
Diversification Opportunities for General Mills and TOWA
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between General and TOWA is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and TOWA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOWA 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 TOWA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOWA has no effect on the direction of General Mills i.e., General Mills and TOWA go up and down completely randomly.
Pair Corralation between General Mills and TOWA
Assuming the 90 days horizon General Mills is expected to generate 0.48 times more return on investment than TOWA. However, General Mills is 2.08 times less risky than TOWA. It trades about 0.31 of its potential returns per unit of risk. TOWA Corporation is currently generating about -0.13 per unit of risk. If you would invest 9,185 in General Mills on November 29, 2024 and sell it today you would earn a total of 1,351 from holding General Mills or generate 14.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
General Mills vs. TOWA Corp.
Performance |
| Timeline |
| General Mills |
| TOWA |
General Mills and TOWA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Mills and TOWA
The main advantage of trading using opposite General Mills and TOWA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills position performs unexpectedly, TOWA 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 TOWA will offset losses from the drop in TOWA's long position.| General Mills vs. Treasury Wine Estates | General Mills vs. Broadcom | General Mills vs. Yuexiu Transport Infrastructure | General Mills vs. Liberty Broadband |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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