Correlation Between General Mills and Nio

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

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

Diversification Opportunities for General Mills and Nio

-0.72

Correlation Coefficient

General Mills  Nio

Pay attention - limited upside

The 3 months correlation between General and Nio is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding General Mills and Nio Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nio Class A 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 Nio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nio Class A has no effect on the direction of General Mills i.e., General Mills and Nio go up and down completely randomly.

Pair Corralation between General Mills and Nio

Considering the 90-day investment horizon General Mills is expected to generate 0.27 times more return on investment than Nio. However, General Mills is 3.75 times less risky than Nio. It trades about 0.18 of its potential returns per unit of risk. Nio Class A is currently generating about -0.05 per unit of risk. If you would invest  6,255  in General Mills on February 12, 2024 and sell it today you would earn a total of  815.00  from holding General Mills or generate 13.03% return on investment over 90 days.

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

General Mills  vs.  Nio Class A

General Mills

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in General Mills are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward indicators, General Mills may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Nio Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nio Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with General Mills and Nio

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

The idea behind General Mills and Nio Class A 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.