Correlation Between Nuzee and General Mills

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

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

Diversification Opportunities for Nuzee and General Mills

0.69

Correlation Coefficient

Nuzee  General Mills

Poor diversification

The 3 months correlation between Nuzee and General is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Nuzee Inc and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Nuzee 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 Nuzee Inc 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 Nuzee i.e., Nuzee and General Mills go up and down completely randomly.

Pair Corralation between Nuzee and General Mills

Given the investment horizon of 90 days Nuzee Inc is expected to generate 24.64 times more return on investment than General Mills. However, Nuzee is 24.64 times more volatile than General Mills. It trades about 0.03 of its potential returns per unit of risk. General Mills is currently generating about -0.03 per unit of risk. If you would invest  1,093  in Nuzee Inc on September 12, 2024 and sell it today you would lose (994.00) from holding Nuzee Inc or give up 90.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.55%
Values	Daily Returns

Nuzee Inc  vs.  General Mills

Nuzee Inc

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Nuzee Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile basic indicators, Nuzee exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 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 Nuzee and General Mills

The main advantage of trading using opposite Nuzee and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuzee 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 Nuzee Inc 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.