Correlation Between Emmi AG and General Mills

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

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

Diversification Opportunities for Emmi AG and General Mills

-0.05

Correlation Coefficient

Emmi AG  General Mills

Good diversification

The 3 months correlation between Emmi and General is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Emmi AG and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Emmi AG 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 Emmi 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 Emmi AG i.e., Emmi AG and General Mills go up and down completely randomly.

Pair Corralation between Emmi AG and General Mills

Assuming the 90 days horizon Emmi AG is expected to under-perform the General Mills. But the pink sheet apears to be less risky and, when comparing its historical volatility, Emmi AG is 1.44 times less risky than General Mills. The pink sheet trades about -0.13 of its potential returns per unit of risk. The General Mills is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  6,296  in General Mills on December 20, 2024 and sell it today you would lose (376.00) from holding General Mills or give up 5.97% of portfolio value over 90 days.

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

Emmi AG  vs.  General Mills

Emmi AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Emmi AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

General Mills

Risk-Adjusted Performance

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 comparatively stable forward indicators, General Mills is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Emmi AG and General Mills

The main advantage of trading using opposite Emmi AG and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emmi AG 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 Emmi AG 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.