Correlation Between General Mills and Bon Natural

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

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

Diversification Opportunities for General Mills and Bon Natural

0.61

Correlation Coefficient

General Mills  Bon Natural

Poor diversification

The 3 months correlation between General and Bon is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and Bon Natural Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bon Natural Life 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 Bon Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bon Natural Life has no effect on the direction of General Mills i.e., General Mills and Bon Natural go up and down completely randomly.

Pair Corralation between General Mills and Bon Natural

Considering the 90-day investment horizon General Mills is expected to generate 0.2 times more return on investment than Bon Natural. However, General Mills is 5.1 times less risky than Bon Natural. It trades about -0.03 of its potential returns per unit of risk. Bon Natural Life is currently generating about -0.03 per unit of risk. If you would invest  7,978  in General Mills on September 12, 2024 and sell it today you would lose (1,364) from holding General Mills or give up 17.1% of portfolio value over 90 days.

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

General Mills  vs.  Bon Natural Life

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.

Bon Natural Life

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bon Natural Life are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Bon Natural is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with General Mills and Bon Natural

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

The idea behind General Mills and Bon Natural Life 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.