Correlation Between General Mills and Nestle SA
Can any of the company-specific risk be diversified away by investing in both General Mills and Nestle 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 Nestle 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 Nestle SA, you can compare the effects of market volatilities on General Mills and Nestle 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 Nestle SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Mills and Nestle SA.
Diversification Opportunities for General Mills and Nestle SA
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between General and Nestle is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and Nestle SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nestle SA 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 Nestle SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nestle SA has no effect on the direction of General Mills i.e., General Mills and Nestle SA go up and down completely randomly.
Pair Corralation between General Mills and Nestle SA
Considering the 90-day investment horizon General Mills is expected to generate 1.14 times more return on investment than Nestle SA. However, General Mills is 1.14 times more volatile than Nestle SA. It trades about -0.25 of its potential returns per unit of risk. Nestle SA is currently generating about -0.57 per unit of risk. If you would invest 6,858 in General Mills on August 24, 2024 and sell it today you would lose (446.00) from holding General Mills or give up 6.5% 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. Nestle SA
Performance |
| Timeline |
| General Mills |
| Nestle SA |
General Mills and Nestle SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Mills and Nestle SA
The main advantage of trading using opposite General Mills and Nestle SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills position performs unexpectedly, Nestle 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 Nestle SA will offset losses from the drop in Nestle SA's long position.| General Mills vs. Better Choice | General Mills vs. BioAdaptives | General Mills vs. Beyond Oil | General Mills vs. Bon Natural Life |
| Nestle SA vs. General Mills | Nestle SA vs. Kellanova | Nestle SA vs. Campbell Soup | Nestle SA vs. Kraft Heinz Co |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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