Correlation Between General Mills and John B

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

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

Diversification Opportunities for General Mills and John B

0.56

Correlation Coefficient

General Mills  John B

Very weak diversification

The 3 months correlation between General and John is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and John B Sanfilippo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John B Sanfilippo 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 John B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John B Sanfilippo has no effect on the direction of General Mills i.e., General Mills and John B go up and down completely randomly.

Pair Corralation between General Mills and John B

Considering the 90-day investment horizon General Mills is expected to under-perform the John B. But the stock apears to be less risky and, when comparing its historical volatility, General Mills is 1.45 times less risky than John B. The stock trades about -0.03 of its potential returns per unit of risk. The John B Sanfilippo is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  8,542  in John B Sanfilippo on December 2, 2024 and sell it today you would lose (1,475) from holding John B Sanfilippo or give up 17.27% of portfolio value over 90 days.

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

General Mills  vs.  John B Sanfilippo

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 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.

John B Sanfilippo

Risk-Adjusted Performance

Very Weak

Over the last 90 days John B Sanfilippo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with General Mills and John B

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

The idea behind General Mills and John B Sanfilippo 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 Transaction History module to view history of all your transactions and understand their impact on performance.