Correlation Between Freshpet and General Mills
Can any of the company-specific risk be diversified away by investing in both Freshpet 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 Freshpet and General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freshpet and General Mills, you can compare the effects of market volatilities on Freshpet 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 Freshpet with a short position of General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freshpet and General Mills.
Diversification Opportunities for Freshpet and General Mills
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Freshpet and General is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Freshpet and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Freshpet 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 Freshpet 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 Freshpet i.e., Freshpet and General Mills go up and down completely randomly.
Pair Corralation between Freshpet and General Mills
Given the investment horizon of 90 days Freshpet is expected to under-perform the General Mills. In addition to that, Freshpet is 1.32 times more volatile than General Mills. It trades about -0.17 of its total potential returns per unit of risk. General Mills is currently generating about 0.02 per unit of volatility. If you would invest 6,884 in General Mills on January 20, 2024 and sell it today you would earn a total of 25.00 from holding General Mills or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freshpet vs. General Mills
Performance |
| Timeline |
| Freshpet |
| General Mills |
Freshpet and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freshpet and General Mills
The main advantage of trading using opposite Freshpet and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freshpet 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.| Freshpet vs. Green Globe International | Freshpet vs. Greenlane Holdings | Freshpet vs. 22nd Century Group | Freshpet vs. 1606 Corp |
| General Mills vs. Green Globe International | General Mills vs. Greenlane Holdings | General Mills vs. 22nd Century Group | General Mills vs. 1606 Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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