Correlation Between General Mills and Rocky Mountain
Can any of the company-specific risk be diversified away by investing in both General Mills and Rocky Mountain 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 Rocky Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Mills and Rocky Mountain Chocolate, you can compare the effects of market volatilities on General Mills and Rocky Mountain 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 Rocky Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Mills and Rocky Mountain.
Diversification Opportunities for General Mills and Rocky Mountain
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between General and Rocky is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and Rocky Mountain Chocolate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocky Mountain Chocolate 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 Rocky Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocky Mountain Chocolate has no effect on the direction of General Mills i.e., General Mills and Rocky Mountain go up and down completely randomly.
Pair Corralation between General Mills and Rocky Mountain
Considering the 90-day investment horizon General Mills is expected to generate 0.38 times more return on investment than Rocky Mountain. However, General Mills is 2.6 times less risky than Rocky Mountain. It trades about -0.03 of its potential returns per unit of risk. Rocky Mountain Chocolate is currently generating about -0.04 per unit of risk. If you would invest 7,998 in General Mills on August 27, 2024 and sell it today you would lose (1,498) from holding General Mills or give up 18.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Mills vs. Rocky Mountain Chocolate
Performance |
| Timeline |
| General Mills |
| Rocky Mountain Chocolate |
General Mills and Rocky Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Mills and Rocky Mountain
The main advantage of trading using opposite General Mills and Rocky Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills position performs unexpectedly, Rocky Mountain 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 Rocky Mountain will offset losses from the drop in Rocky Mountain's long position.| General Mills vs. Bellring Brands LLC | General Mills vs. Ingredion Incorporated | General Mills vs. Nomad Foods | General Mills vs. Post Holdings |
| Rocky Mountain vs. Mondelez International | Rocky Mountain vs. Tootsie Roll Industries | Rocky Mountain vs. Chocoladefabriken Lindt Sprngli | Rocky Mountain vs. Barry Callebaut AG |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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