Correlation Between Smurfit Kappa and General Mills
Can any of the company-specific risk be diversified away by investing in both Smurfit Kappa 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 Smurfit Kappa and General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smurfit Kappa Group and General Mills, you can compare the effects of market volatilities on Smurfit Kappa 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 Smurfit Kappa with a short position of General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smurfit Kappa and General Mills.
Diversification Opportunities for Smurfit Kappa and General Mills
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smurfit and General is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit Kappa Group and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Smurfit Kappa 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 Smurfit Kappa Group 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 Smurfit Kappa i.e., Smurfit Kappa and General Mills go up and down completely randomly.
Pair Corralation between Smurfit Kappa and General Mills
Assuming the 90 days horizon Smurfit Kappa is expected to generate 1.06 times less return on investment than General Mills. In addition to that, Smurfit Kappa is 1.11 times more volatile than General Mills. It trades about 0.14 of its total potential returns per unit of risk. General Mills is currently generating about 0.17 per unit of volatility. If you would invest 8,190 in General Mills on September 1, 2024 and sell it today you would earn a total of 668.00 from holding General Mills or generate 8.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Smurfit Kappa Group vs. General Mills
Performance |
| Timeline |
| Smurfit Kappa Group |
| General Mills |
Smurfit Kappa and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smurfit Kappa and General Mills
The main advantage of trading using opposite Smurfit Kappa and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit Kappa 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.| Smurfit Kappa vs. Packaging of | Smurfit Kappa vs. Superior Plus Corp | Smurfit Kappa vs. Origin Agritech | Smurfit Kappa vs. Identiv |
| General Mills vs. INTER CARS SA | General Mills vs. Geely Automobile Holdings | General Mills vs. GEELY AUTOMOBILE | General Mills vs. MCEWEN MINING INC |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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