Correlation Between Rheinmetall and General Mills
Can any of the company-specific risk be diversified away by investing in both Rheinmetall 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 Rheinmetall and General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and General Mills, you can compare the effects of market volatilities on Rheinmetall 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 Rheinmetall with a short position of General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and General Mills.
Diversification Opportunities for Rheinmetall and General Mills
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rheinmetall and General is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Rheinmetall 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 Rheinmetall AG 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 Rheinmetall i.e., Rheinmetall and General Mills go up and down completely randomly.
Pair Corralation between Rheinmetall and General Mills
Assuming the 90 days trading horizon Rheinmetall AG is expected to generate 1.8 times more return on investment than General Mills. However, Rheinmetall is 1.8 times more volatile than General Mills. It trades about 0.1 of its potential returns per unit of risk. General Mills is currently generating about 0.04 per unit of risk. If you would invest 43,241 in Rheinmetall AG on September 1, 2024 and sell it today you would earn a total of 19,079 from holding Rheinmetall AG or generate 44.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rheinmetall AG vs. General Mills
Performance |
| Timeline |
| Rheinmetall AG |
| General Mills |
Rheinmetall and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and General Mills
The main advantage of trading using opposite Rheinmetall and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall 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.| Rheinmetall vs. Entravision Communications | Rheinmetall vs. Ares Management Corp | Rheinmetall vs. Charter Communications | Rheinmetall vs. Highlight Communications AG |
| General Mills vs. Danone SA | General Mills vs. Superior Plus Corp | General Mills vs. NMI Holdings | General Mills vs. Origin Agritech |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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