Correlation Between General Mills and Beyond Meat

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

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

Diversification Opportunities for General Mills and Beyond Meat

-0.23

Correlation Coefficient

General Mills  Beyond Meat

Very good diversification

The 3 months correlation between General and Beyond is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and Beyond Meat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Meat 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 Beyond Meat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Meat has no effect on the direction of General Mills i.e., General Mills and Beyond Meat go up and down completely randomly.

Pair Corralation between General Mills and Beyond Meat

Considering the 90-day investment horizon General Mills is expected to generate 0.46 times more return on investment than Beyond Meat. However, General Mills is 2.16 times less risky than Beyond Meat. It trades about -0.04 of its potential returns per unit of risk. Beyond Meat is currently generating about -0.07 per unit of risk. If you would invest  6,272  in General Mills on December 29, 2024 and sell it today you would lose (306.00) from holding General Mills or give up 4.88% of portfolio value over 90 days.

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

General Mills  vs.  Beyond Meat

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.

Beyond Meat

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beyond Meat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with General Mills and Beyond Meat

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

The idea behind General Mills and Beyond Meat 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.