Correlation Between NYSE Composite and General Mills
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and General Mills, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and General Mills.
Diversification Opportunities for NYSE Composite and General Mills
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between NYSE and General is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and General Mills go up and down completely randomly.
Pair Corralation between NYSE Composite and General Mills
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.61 times more return on investment than General Mills. However, NYSE Composite is 1.63 times less risky than General Mills. It trades about 0.1 of its potential returns per unit of risk. General Mills is currently generating about -0.03 per unit of risk. If you would invest 1,476,437 in NYSE Composite on November 1, 2024 and sell it today you would earn a total of 540,185 from holding NYSE Composite or generate 36.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. General Mills
Performance |
| Timeline |
NYSE Composite and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
General Mills
Pair trading matchups for General Mills
Pair Trading with NYSE Composite and General Mills
The main advantage of trading using opposite NYSE Composite and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Pembina Pipeline | NYSE Composite vs. Precision Drilling | NYSE Composite vs. HUTCHMED DRC | NYSE Composite vs. Transocean |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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