Correlation Between Calbee and General Mills

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

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

Diversification Opportunities for Calbee and General Mills

0.85

Correlation Coefficient

Calbee  General Mills

Very poor diversification

The 3 months correlation between Calbee and General is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Calbee Inc and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Calbee 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 Calbee Inc 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 Calbee i.e., Calbee and General Mills go up and down completely randomly.

Pair Corralation between Calbee and General Mills

Assuming the 90 days horizon Calbee Inc is expected to generate 2.44 times more return on investment than General Mills. However, Calbee is 2.44 times more volatile than General Mills. It trades about 0.01 of its potential returns per unit of risk. General Mills is currently generating about -0.03 per unit of risk. If you would invest  576.00  in Calbee Inc on September 20, 2024 and sell it today you would lose (58.00) from holding Calbee Inc or give up 10.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Calbee Inc  vs.  General Mills

Calbee Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calbee Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

General Mills

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days General Mills has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Calbee and General Mills

The main advantage of trading using opposite Calbee and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calbee 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 Calbee Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.