Correlation Between General Mills and Whole Earth

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

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

Diversification Opportunities for General Mills and Whole Earth

0.56

Correlation Coefficient

General Mills  Whole Earth

Very weak diversification

The 3 months correlation between General and Whole is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and Whole Earth Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whole Earth Brands 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 Whole Earth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whole Earth Brands has no effect on the direction of General Mills i.e., General Mills and Whole Earth go up and down completely randomly.

Pair Corralation between General Mills and Whole Earth

Considering the 90-day investment horizon General Mills is expected to generate 6.98 times more return on investment than Whole Earth. However, General Mills is 6.98 times more volatile than Whole Earth Brands. It trades about 0.2 of its potential returns per unit of risk. Whole Earth Brands is currently generating about 0.0 per unit of risk. If you would invest  6,776  in General Mills on January 26, 2024 and sell it today you would earn a total of  385.00  from holding General Mills or generate 5.68% return on investment over 90 days.

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

General Mills  vs.  Whole Earth Brands

General Mills

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in General Mills are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward indicators, General Mills may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Whole Earth Brands

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Whole Earth Brands are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Whole Earth exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with General Mills and Whole Earth

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

The idea behind General Mills and Whole Earth Brands 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 Transaction History module to view history of all your transactions and understand their impact on performance.