Correlation Between Dole PLC and General Mills

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

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

Diversification Opportunities for Dole PLC and General Mills

0.65

Correlation Coefficient

Dole PLC  General Mills

Poor diversification

The 3 months correlation between Dole and General is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dole PLC and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Dole PLC 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 Dole PLC 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 Dole PLC i.e., Dole PLC and General Mills go up and down completely randomly.

Pair Corralation between Dole PLC and General Mills

Given the investment horizon of 90 days Dole PLC is expected to generate 2.01 times more return on investment than General Mills. However, Dole PLC is 2.01 times more volatile than General Mills. It trades about -0.09 of its potential returns per unit of risk. General Mills is currently generating about -0.18 per unit of risk. If you would invest  1,655  in Dole PLC on September 14, 2024 and sell it today you would lose (181.00) from holding Dole PLC or give up 10.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Dole PLC  vs.  General Mills

Dole PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dole PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 latest weak performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Dole PLC and General Mills

The main advantage of trading using opposite Dole PLC and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dole PLC 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 Dole PLC 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.