Correlation Between Identiv and General Mills

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

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

Diversification Opportunities for Identiv and General Mills

0.84

Correlation Coefficient

Identiv  General Mills

Very poor diversification

The 3 months correlation between Identiv and General is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Identiv 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 Identiv are associated (or correlated) with General Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Mills has no effect on the direction of Identiv i.e., Identiv and General Mills go up and down completely randomly.

Pair Corralation between Identiv and General Mills

Assuming the 90 days trading horizon Identiv is expected to generate 1.0 times less return on investment than General Mills. In addition to that, Identiv is 1.72 times more volatile than General Mills. It trades about 0.12 of its total potential returns per unit of risk. General Mills is currently generating about 0.21 per unit of volatility. If you would invest  7,067  in General Mills on August 30, 2024 and sell it today you would earn a total of  1,628  from holding General Mills or generate 23.04% return on investment over 90 days.

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

Identiv  vs.  General Mills

Identiv

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Identiv are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Identiv reported solid returns over the last few months and may actually be approaching a breakup point.

General Mills

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in General Mills are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, General Mills reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Identiv and General Mills

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

The idea behind Identiv and General Mills 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.