Correlation Between General Mills and Right On
Can any of the company-specific risk be diversified away by investing in both General Mills and Right On 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 Right On into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Mills and Right On Brands, you can compare the effects of market volatilities on General Mills and Right On 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 Right On. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Mills and Right On.
Diversification Opportunities for General Mills and Right On
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between General and Right is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and Right On Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Right On Brands 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 Right On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Right On Brands has no effect on the direction of General Mills i.e., General Mills and Right On go up and down completely randomly.
Pair Corralation between General Mills and Right On
Considering the 90-day investment horizon General Mills is expected to generate 0.09 times more return on investment than Right On. However, General Mills is 11.05 times less risky than Right On. It trades about -0.23 of its potential returns per unit of risk. Right On Brands is currently generating about -0.03 per unit of risk. If you would invest 6,335 in General Mills on October 20, 2024 and sell it today you would lose (372.00) from holding General Mills or give up 5.87% 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. Right On Brands
Performance |
| Timeline |
| General Mills |
| Right On Brands |
General Mills and Right On Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Mills and Right On
The main advantage of trading using opposite General Mills and Right On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills position performs unexpectedly, Right On 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 Right On will offset losses from the drop in Right On's long position.| General Mills vs. Campbell Soup | General Mills vs. Kraft Heinz Co | General Mills vs. ConAgra Foods | General Mills vs. Hormel Foods |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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