Correlation Between Danone SA and General Mills
Can any of the company-specific risk be diversified away by investing in both Danone SA and General Mills 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 Danone SA and General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danone SA and General Mills, you can compare the effects of market volatilities on Danone SA and General Mills 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 Danone SA with a short position of General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danone SA and General Mills.
Diversification Opportunities for Danone SA and General Mills
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Danone and General is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Danone SA and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Danone SA 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 Danone SA are associated (or correlated) with General Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Mills has no effect on the direction of Danone SA i.e., Danone SA and General Mills go up and down completely randomly.
Pair Corralation between Danone SA and General Mills
Assuming the 90 days horizon Danone SA is expected to generate 1.1 times more return on investment than General Mills. However, Danone SA is 1.1 times more volatile than General Mills. It trades about -0.07 of its potential returns per unit of risk. General Mills is currently generating about -0.24 per unit of risk. If you would invest 7,125 in Danone SA on August 28, 2024 and sell it today you would lose (265.00) from holding Danone SA or give up 3.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danone SA vs. General Mills
Performance |
| Timeline |
| Danone SA |
| General Mills |
Danone SA and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danone SA and General Mills
The main advantage of trading using opposite Danone SA and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danone SA position performs unexpectedly, General Mills 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 General Mills will offset losses from the drop in General Mills' long position.| Danone SA vs. Lifevantage | Danone SA vs. Simply Good Foods | Danone SA vs. Bellring Brands LLC | Danone SA vs. Seneca Foods Corp |
| General Mills vs. Bellring Brands LLC | General Mills vs. Ingredion Incorporated | General Mills vs. Nomad Foods | General Mills vs. Simply Good 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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