Correlation Between CDL INVESTMENT and General Mills

Can any of the company-specific risk be diversified away by investing in both CDL INVESTMENT 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 CDL INVESTMENT and General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CDL INVESTMENT and General Mills, you can compare the effects of market volatilities on CDL INVESTMENT 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 CDL INVESTMENT with a short position of General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDL INVESTMENT and General Mills.

Diversification Opportunities for CDL INVESTMENT and General Mills

0.14

Correlation Coefficient

CDL INVESTMENT  General Mills

Average diversification

The 3 months correlation between CDL and General is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding CDL INVESTMENT and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and CDL INVESTMENT 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 CDL INVESTMENT 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 CDL INVESTMENT i.e., CDL INVESTMENT and General Mills go up and down completely randomly.

Pair Corralation between CDL INVESTMENT and General Mills

Assuming the 90 days trading horizon CDL INVESTMENT is expected to generate 28.29 times less return on investment than General Mills. In addition to that, CDL INVESTMENT is 1.26 times more volatile than General Mills. It trades about 0.01 of its total potential returns per unit of risk. General Mills is currently generating about 0.24 per unit of volatility. If you would invest  8,587  in General Mills on October 5, 2024 and sell it today you would earn a total of  402.00  from holding General Mills or generate 4.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

CDL INVESTMENT  vs.  General Mills

CDL INVESTMENT

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days CDL INVESTMENT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CDL INVESTMENT is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

General Mills

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in General Mills are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, General Mills unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CDL INVESTMENT and General Mills

The main advantage of trading using opposite CDL INVESTMENT and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDL INVESTMENT 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 CDL INVESTMENT 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.