Correlation Between General Mills and SLR Investment

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

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

Diversification Opportunities for General Mills and SLR Investment

0.66

Correlation Coefficient

General Mills  SLR Investment

Poor diversification

The 3 months correlation between General and SLR is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp and General Mills 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 Mills are associated (or correlated) with SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of General Mills i.e., General Mills and SLR Investment go up and down completely randomly.

Pair Corralation between General Mills and SLR Investment

Assuming the 90 days horizon General Mills is expected to generate 1.65 times more return on investment than SLR Investment. However, General Mills is 1.65 times more volatile than SLR Investment Corp. It trades about 0.12 of its potential returns per unit of risk. SLR Investment Corp is currently generating about 0.06 per unit of risk. If you would invest  8,921  in General Mills on December 28, 2024 and sell it today you would earn a total of  1,201  from holding General Mills or generate 13.46% return on investment over 90 days.

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

General Mills  vs.  SLR Investment Corp

General Mills

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Mills are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, General Mills reported solid returns over the last few months and may actually be approaching a breakup point.

SLR Investment Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SLR Investment is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with General Mills and SLR Investment

The main advantage of trading using opposite General Mills and SLR Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills position performs unexpectedly, SLR Investment 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 SLR Investment will offset losses from the drop in SLR Investment's long position.

The idea behind General Mills and SLR Investment Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.