Correlation Between Nichirei and General Mills
Can any of the company-specific risk be diversified away by investing in both Nichirei 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 Nichirei and General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nichirei and General Mills, you can compare the effects of market volatilities on Nichirei 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 Nichirei with a short position of General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nichirei and General Mills.
Diversification Opportunities for Nichirei and General Mills
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nichirei and General is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nichirei and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Nichirei 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 Nichirei 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 Nichirei i.e., Nichirei and General Mills go up and down completely randomly.
Pair Corralation between Nichirei and General Mills
Assuming the 90 days horizon Nichirei is expected to under-perform the General Mills. In addition to that, Nichirei is 1.29 times more volatile than General Mills. It trades about -0.02 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 6,546 in General Mills on August 28, 2024 and sell it today you would earn a total of 7.00 from holding General Mills or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Nichirei vs. General Mills
Performance |
| Timeline |
| Nichirei |
| General Mills |
Nichirei and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nichirei and General Mills
The main advantage of trading using opposite Nichirei and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nichirei 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.The idea behind Nichirei and General Mills pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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