Correlation Between Ingredion Incorporated and General Mills
Can any of the company-specific risk be diversified away by investing in both Ingredion Incorporated 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 Ingredion Incorporated and General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ingredion Incorporated and General Mills, you can compare the effects of market volatilities on Ingredion Incorporated 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 Ingredion Incorporated with a short position of General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingredion Incorporated and General Mills.
Diversification Opportunities for Ingredion Incorporated and General Mills
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ingredion and General is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ingredion Incorporated and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Ingredion Incorporated 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 Ingredion Incorporated 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 Ingredion Incorporated i.e., Ingredion Incorporated and General Mills go up and down completely randomly.
Pair Corralation between Ingredion Incorporated and General Mills
Given the investment horizon of 90 days Ingredion Incorporated is expected to generate 1.16 times more return on investment than General Mills. However, Ingredion Incorporated is 1.16 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 -0.03 per unit of risk. If you would invest 9,413 in Ingredion Incorporated on August 24, 2024 and sell it today you would earn a total of 5,234 from holding Ingredion Incorporated or generate 55.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ingredion Incorporated vs. General Mills
Performance |
| Timeline |
| Ingredion Incorporated |
| General Mills |
Ingredion Incorporated and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ingredion Incorporated and General Mills
The main advantage of trading using opposite Ingredion Incorporated and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ingredion Incorporated 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.| Ingredion Incorporated vs. Lancaster Colony | Ingredion Incorporated vs. Treehouse Foods | Ingredion Incorporated vs. John B Sanfilippo | Ingredion Incorporated vs. Seneca Foods Corp |
| General Mills vs. Bellring Brands LLC | General Mills vs. Treehouse Foods | General Mills vs. Ingredion Incorporated | General Mills vs. JM Smucker |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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