Correlation Between Hormel Foods and General Mills
Can any of the company-specific risk be diversified away by investing in both Hormel Foods 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 Hormel Foods and General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hormel Foods and General Mills, you can compare the effects of market volatilities on Hormel Foods 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 Hormel Foods with a short position of General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hormel Foods and General Mills.
Diversification Opportunities for Hormel Foods and General Mills
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hormel and General is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Hormel Foods and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Hormel Foods 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 Hormel Foods 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 Hormel Foods i.e., Hormel Foods and General Mills go up and down completely randomly.
Pair Corralation between Hormel Foods and General Mills
Assuming the 90 days horizon Hormel Foods is expected to under-perform the General Mills. In addition to that, Hormel Foods is 1.22 times more volatile than General Mills. It trades about -0.03 of its total potential returns per unit of risk. General Mills is currently generating about -0.01 per unit of volatility. If you would invest 6,644 in General Mills on October 20, 2024 and sell it today you would lose (837.00) from holding General Mills or give up 12.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hormel Foods vs. General Mills
Performance |
| Timeline |
| Hormel Foods |
| General Mills |
Hormel Foods and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hormel Foods and General Mills
The main advantage of trading using opposite Hormel Foods and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hormel Foods 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.| Hormel Foods vs. Nestl SA | Hormel Foods vs. Kraft Heinz Co | Hormel Foods vs. General Mills | Hormel Foods vs. General Mills |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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