Correlation Between Kerry Group and General Mills

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Can any of the company-specific risk be diversified away by investing in both Kerry Group 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 Kerry Group and General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kerry Group PLC and General Mills, you can compare the effects of market volatilities on Kerry Group 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 Kerry Group with a short position of General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kerry Group and General Mills.

Diversification Opportunities for Kerry Group and General Mills

-0.18
  Correlation Coefficient

Good diversification

The 3 months correlation between Kerry and General is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Kerry Group PLC and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Kerry Group 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 Kerry Group PLC 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 Kerry Group i.e., Kerry Group and General Mills go up and down completely randomly.

Pair Corralation between Kerry Group and General Mills

Assuming the 90 days horizon Kerry Group PLC is expected to generate 0.96 times more return on investment than General Mills. However, Kerry Group PLC is 1.04 times less risky than General Mills. It trades about 0.09 of its potential returns per unit of risk. General Mills is currently generating about 0.05 per unit of risk. If you would invest  8,447  in Kerry Group PLC on February 1, 2024 and sell it today you would earn a total of  206.00  from holding Kerry Group PLC or generate 2.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Kerry Group PLC  vs.  General Mills

 Performance 
       Timeline  
Kerry Group PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kerry Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Kerry Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
General Mills 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in General Mills are ranked lower than 9 (%) 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 June 2024.

Kerry Group and General Mills Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kerry Group and General Mills

The main advantage of trading using opposite Kerry Group and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kerry Group 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 Kerry Group PLC 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.
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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