Correlation Between General Mills and Emmi AG
Can any of the company-specific risk be diversified away by investing in both General Mills and Emmi AG 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 Emmi AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Mills and Emmi AG, you can compare the effects of market volatilities on General Mills and Emmi AG 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 Emmi AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Mills and Emmi AG.
Diversification Opportunities for General Mills and Emmi AG
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between General and Emmi is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and Emmi AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emmi 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 Emmi AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emmi AG has no effect on the direction of General Mills i.e., General Mills and Emmi AG go up and down completely randomly.
Pair Corralation between General Mills and Emmi AG
Considering the 90-day investment horizon General Mills is expected to under-perform the Emmi AG. But the stock apears to be less risky and, when comparing its historical volatility, General Mills is 2.79 times less risky than Emmi AG. The stock trades about -0.03 of its potential returns per unit of risk. The Emmi AG is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 72,600 in Emmi AG on August 28, 2024 and sell it today you would earn a total of 26,400 from holding Emmi AG or generate 36.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 72.27% |
| Values | Daily Returns |
General Mills vs. Emmi AG
Performance |
| Timeline |
| General Mills |
| Emmi AG |
General Mills and Emmi AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Mills and Emmi AG
The main advantage of trading using opposite General Mills and Emmi AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills position performs unexpectedly, Emmi AG 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 Emmi AG will offset losses from the drop in Emmi AG's long position.| General Mills vs. Bellring Brands LLC | General Mills vs. Ingredion Incorporated | General Mills vs. Nomad Foods | General Mills vs. Simply Good Foods |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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