Correlation Between General Mills and Premier Foods
Can any of the company-specific risk be diversified away by investing in both General Mills and Premier Foods 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 Premier Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Mills and Premier Foods PLC, you can compare the effects of market volatilities on General Mills and Premier Foods 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 Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Mills and Premier Foods.
Diversification Opportunities for General Mills and Premier Foods
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between General and Premier is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and Premier Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Foods PLC 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 Premier Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Foods PLC has no effect on the direction of General Mills i.e., General Mills and Premier Foods go up and down completely randomly.
Pair Corralation between General Mills and Premier Foods
Assuming the 90 days trading horizon General Mills is expected to generate 719.0 times less return on investment than Premier Foods. But when comparing it to its historical volatility, General Mills is 1.1 times less risky than Premier Foods. It trades about 0.0 of its potential returns per unit of risk. Premier Foods PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 124.00 in Premier Foods PLC on September 4, 2024 and sell it today you would earn a total of 104.00 from holding Premier Foods PLC or generate 83.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
General Mills vs. Premier Foods PLC
Performance |
| Timeline |
| General Mills |
| Premier Foods PLC |
General Mills and Premier Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Mills and Premier Foods
The main advantage of trading using opposite General Mills and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills position performs unexpectedly, Premier Foods 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 Premier Foods will offset losses from the drop in Premier Foods' long position.| General Mills vs. Zurich Insurance Group | General Mills vs. REGAL ASIAN INVESTMENTS | General Mills vs. HK Electric Investments | General Mills vs. CapitaLand Investment Limited |
| Premier Foods vs. Nestl SA | Premier Foods vs. Kraft Heinz Co | Premier Foods vs. General Mills | Premier Foods vs. Kellogg Company |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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