Correlation Between McCormick Company and General Mills
Can any of the company-specific risk be diversified away by investing in both McCormick Company 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 McCormick Company and General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McCormick Company Incorporated and General Mills, you can compare the effects of market volatilities on McCormick Company 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 McCormick Company with a short position of General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of McCormick Company and General Mills.
Diversification Opportunities for McCormick Company and General Mills
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between McCormick and General is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding McCormick Company Incorporated and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and McCormick Company 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 McCormick Company Incorporated 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 McCormick Company i.e., McCormick Company and General Mills go up and down completely randomly.
Pair Corralation between McCormick Company and General Mills
Considering the 90-day investment horizon McCormick Company Incorporated is expected to under-perform the General Mills. But the etf apears to be less risky and, when comparing its historical volatility, McCormick Company Incorporated is 1.09 times less risky than General Mills. The etf trades about -0.05 of its potential returns per unit of risk. The General Mills is currently generating about 0.2 of returns per unit of risk over similar time horizon. 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
McCormick Company Incorporated vs. General Mills
Performance |
| Timeline |
| McCormick rporated |
| General Mills |
McCormick Company and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McCormick Company and General Mills
The main advantage of trading using opposite McCormick Company and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McCormick Company 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.| McCormick Company vs. ConAgra Foods | McCormick Company vs. Campbell Soup | McCormick Company vs. Kellanova | McCormick Company vs. General Mills |
| General Mills vs. Campbell Soup | General Mills vs. Kraft Heinz Co | General Mills vs. ConAgra Foods | General Mills vs. Hormel Foods |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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