Correlation Between General Mills and WH Group

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

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

Diversification Opportunities for General Mills and WH Group

-0.62

Correlation Coefficient

General Mills  WH Group

Excellent diversification

The 3 months correlation between General and WHGRF is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and WH Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WH Group Limited 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 WH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WH Group Limited has no effect on the direction of General Mills i.e., General Mills and WH Group go up and down completely randomly.

Pair Corralation between General Mills and WH Group

Considering the 90-day investment horizon General Mills is expected to under-perform the WH Group. But the stock apears to be less risky and, when comparing its historical volatility, General Mills is 46.79 times less risky than WH Group. The stock trades about -0.03 of its potential returns per unit of risk. The WH Group Limited is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  18.00  in WH Group Limited on September 8, 2024 and sell it today you would earn a total of  61.00  from holding WH Group Limited or generate 338.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	65.52%
Values	Daily Returns

General Mills  vs.  WH Group Limited

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.

WH Group Limited

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WH Group Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, WH Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with General Mills and WH Group

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

The idea behind General Mills and WH Group Limited 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.