Correlation Between Laird Superfood and General Mills

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

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

Diversification Opportunities for Laird Superfood and General Mills

0.79

Correlation Coefficient

Laird Superfood  General Mills

Poor diversification

The 3 months correlation between Laird and General is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Laird Superfood and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Laird Superfood 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 Laird Superfood 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 Laird Superfood i.e., Laird Superfood and General Mills go up and down completely randomly.

Pair Corralation between Laird Superfood and General Mills

Considering the 90-day investment horizon Laird Superfood is expected to under-perform the General Mills. In addition to that, Laird Superfood is 3.15 times more volatile than General Mills. It trades about -0.11 of its total potential returns per unit of risk. General Mills is currently generating about -0.11 per unit of volatility. If you would invest  6,632  in General Mills on December 1, 2024 and sell it today you would lose (634.00) from holding General Mills or give up 9.56% of portfolio value over 90 days.

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

Laird Superfood  vs.  General Mills

Laird Superfood

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with Laird Superfood and General Mills

The main advantage of trading using opposite Laird Superfood and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laird Superfood 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 Laird Superfood 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.

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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.