Correlation Between General Mills and Glanbia Plc

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

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

Diversification Opportunities for General Mills and Glanbia Plc

0.81

Correlation Coefficient

General Mills  Glanbia Plc

Very poor diversification

The 3 months correlation between General and Glanbia is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and Glanbia plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glanbia plc 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 Glanbia Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glanbia plc has no effect on the direction of General Mills i.e., General Mills and Glanbia Plc go up and down completely randomly.

Pair Corralation between General Mills and Glanbia Plc

Considering the 90-day investment horizon General Mills is expected to generate 0.72 times more return on investment than Glanbia Plc. However, General Mills is 1.39 times less risky than Glanbia Plc. It trades about 0.08 of its potential returns per unit of risk. Glanbia plc is currently generating about -0.02 per unit of risk. If you would invest  6,278  in General Mills on September 20, 2024 and sell it today you would earn a total of  113.00  from holding General Mills or generate 1.8% return on investment over 90 days.

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

General Mills  vs.  Glanbia plc

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 weak performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Glanbia plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glanbia plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with General Mills and Glanbia Plc

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

The idea behind General Mills and Glanbia plc 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.