Correlation Between Kraft Heinz and General Mills
Can any of the company-specific risk be diversified away by investing in both Kraft Heinz 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 Kraft Heinz and General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kraft Heinz Co and General Mills, you can compare the effects of market volatilities on Kraft Heinz 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 Kraft Heinz with a short position of General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kraft Heinz and General Mills.
Diversification Opportunities for Kraft Heinz and General Mills
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kraft and General is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Heinz Co and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Kraft Heinz 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 Kraft Heinz Co 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 Kraft Heinz i.e., Kraft Heinz and General Mills go up and down completely randomly.
Pair Corralation between Kraft Heinz and General Mills
Considering the 90-day investment horizon Kraft Heinz Co is expected to under-perform the General Mills. But the stock apears to be less risky and, when comparing its historical volatility, Kraft Heinz Co is 1.04 times less risky than General Mills. The stock trades about -0.35 of its potential returns per unit of risk. The General Mills is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 6,827 in General Mills on August 28, 2024 and sell it today you would lose (274.00) from holding General Mills or give up 4.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kraft Heinz Co vs. General Mills
Performance |
| Timeline |
| Kraft Heinz |
| General Mills |
Kraft Heinz and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kraft Heinz and General Mills
The main advantage of trading using opposite Kraft Heinz and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kraft Heinz 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.| Kraft Heinz vs. General Mills | Kraft Heinz vs. Campbell Soup | Kraft Heinz vs. ConAgra Foods | Kraft Heinz vs. Hormel Foods |
| General Mills vs. Campbell Soup | General Mills vs. Kraft Heinz Co | General Mills vs. ConAgra Foods | General Mills vs. Hormel 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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