Correlation Between General Mills and BRF SA
Can any of the company-specific risk be diversified away by investing in both General Mills and BRF SA 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 BRF SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Mills and BRF SA ADR, you can compare the effects of market volatilities on General Mills and BRF SA 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 BRF SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Mills and BRF SA.
Diversification Opportunities for General Mills and BRF SA
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between General and BRF is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and BRF SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRF SA ADR 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 BRF SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRF SA ADR has no effect on the direction of General Mills i.e., General Mills and BRF SA go up and down completely randomly.
Pair Corralation between General Mills and BRF SA
Considering the 90-day investment horizon General Mills is expected to generate 0.69 times more return on investment than BRF SA. However, General Mills is 1.46 times less risky than BRF SA. It trades about -0.13 of its potential returns per unit of risk. BRF SA ADR is currently generating about -0.16 per unit of risk. If you would invest 6,289 in General Mills on November 3, 2024 and sell it today you would lose (275.00) from holding General Mills or give up 4.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Mills vs. BRF SA ADR
Performance |
| Timeline |
| General Mills |
| BRF SA ADR |
General Mills and BRF SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Mills and BRF SA
The main advantage of trading using opposite General Mills and BRF SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills position performs unexpectedly, BRF SA 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 BRF SA will offset losses from the drop in BRF SA's long position.| General Mills vs. Campbell Soup | General Mills vs. Kraft Heinz Co | General Mills vs. ConAgra Foods | General Mills vs. Hormel Foods |
| BRF SA vs. Marfrig Global Foods | BRF SA vs. Pilgrims Pride Corp | BRF SA vs. John B Sanfilippo | BRF SA vs. Seneca Foods Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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