Correlation Between General Mills and J J
Can any of the company-specific risk be diversified away by investing in both General Mills and J J 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 J J into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Mills and J J Snack, you can compare the effects of market volatilities on General Mills and J J 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 J J. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Mills and J J.
Diversification Opportunities for General Mills and J J
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between General and JJSF is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and J J Snack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J J Snack 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 J J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J J Snack has no effect on the direction of General Mills i.e., General Mills and J J go up and down completely randomly.
Pair Corralation between General Mills and J J
Considering the 90-day investment horizon General Mills is expected to generate 0.71 times more return on investment than J J. However, General Mills is 1.41 times less risky than J J. It trades about -0.06 of its potential returns per unit of risk. J J Snack is currently generating about -0.39 per unit of risk. If you would invest 6,034 in General Mills on November 9, 2024 and sell it today you would lose (110.00) from holding General Mills or give up 1.82% 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. J J Snack
Performance |
| Timeline |
| General Mills |
| J J Snack |
General Mills and J J Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Mills and J J
The main advantage of trading using opposite General Mills and J J positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills position performs unexpectedly, J J 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 J J will offset losses from the drop in J J's long position.| General Mills vs. Campbell Soup | General Mills vs. Kraft Heinz Co | General Mills vs. ConAgra Foods | General Mills vs. Hormel 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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