Correlation Between General Mills and Boston Beer
Can any of the company-specific risk be diversified away by investing in both General Mills and Boston Beer 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 Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Mills and Boston Beer, you can compare the effects of market volatilities on General Mills and Boston Beer 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 Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Mills and Boston Beer.
Diversification Opportunities for General Mills and Boston Beer
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between General and Boston is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer 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 Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of General Mills i.e., General Mills and Boston Beer go up and down completely randomly.
Pair Corralation between General Mills and Boston Beer
Considering the 90-day investment horizon General Mills is expected to generate 0.49 times more return on investment than Boston Beer. However, General Mills is 2.05 times less risky than Boston Beer. It trades about -0.02 of its potential returns per unit of risk. Boston Beer is currently generating about -0.01 per unit of risk. If you would invest 7,275 in General Mills on August 27, 2024 and sell it today you would lose (775.00) from holding General Mills or give up 10.65% 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. Boston Beer
Performance |
| Timeline |
| General Mills |
| Boston Beer |
General Mills and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Mills and Boston Beer
The main advantage of trading using opposite General Mills and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills position performs unexpectedly, Boston Beer 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 Boston Beer will offset losses from the drop in Boston Beer's long position.| General Mills vs. Campbell Soup | General Mills vs. Kraft Heinz Co | General Mills vs. ConAgra Foods | General Mills vs. Hormel Foods |
| Boston Beer vs. Budweiser Brewing | Boston Beer vs. Anheuser Busch InBev SANV | Boston Beer vs. Ambev SA ADR | Boston Beer vs. Fomento Economico Mexicano |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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