Correlation Between General Dynamics and General Mills

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

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

Diversification Opportunities for General Dynamics and General Mills

0.0

Correlation Coefficient

General Dynamics  General Mills

Pay attention - limited upside

The 3 months correlation between General and General is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and General Dynamics 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 General Dynamics 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 General Dynamics i.e., General Dynamics and General Mills go up and down completely randomly.

Pair Corralation between General Dynamics and General Mills

If you would invest  7,966  in General Mills on October 22, 2024 and sell it today you would earn a total of  1,010  from holding General Mills or generate 12.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

General Dynamics  vs.  General Mills

General Dynamics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days General Dynamics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, General Dynamics is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

General Mills

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in General Mills are ranked lower than 10 (%) 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 General Dynamics and General Mills

The main advantage of trading using opposite General Dynamics and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Dynamics 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 General Dynamics 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.