Correlation Between General Mills and Commerzbank
Can any of the company-specific risk be diversified away by investing in both General Mills and Commerzbank 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 Commerzbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Mills and Commerzbank AG, you can compare the effects of market volatilities on General Mills and Commerzbank 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 Commerzbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Mills and Commerzbank.
Diversification Opportunities for General Mills and Commerzbank
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between General and Commerzbank is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and Commerzbank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commerzbank 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 Commerzbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commerzbank AG has no effect on the direction of General Mills i.e., General Mills and Commerzbank go up and down completely randomly.
Pair Corralation between General Mills and Commerzbank
Assuming the 90 days horizon General Mills is expected to generate 0.65 times more return on investment than Commerzbank. However, General Mills is 1.53 times less risky than Commerzbank. It trades about 0.2 of its potential returns per unit of risk. Commerzbank AG is currently generating about -0.01 per unit of risk. If you would invest 5,691 in General Mills on August 29, 2024 and sell it today you would earn a total of 3,004 from holding General Mills or generate 52.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Mills vs. Commerzbank AG
Performance |
| Timeline |
| General Mills |
| Commerzbank AG |
General Mills and Commerzbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Mills and Commerzbank
The main advantage of trading using opposite General Mills and Commerzbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills position performs unexpectedly, Commerzbank 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 Commerzbank will offset losses from the drop in Commerzbank'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 |
| Commerzbank vs. Dairy Farm International | Commerzbank vs. HF FOODS GRP | Commerzbank vs. IMAGIN MEDICAL INC | Commerzbank vs. Apollo Medical Holdings |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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