Correlation Between Grand Canyon and General Mills

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

By analyzing existing cross correlation between Grand Canyon Education and General Mills, you can compare the effects of market volatilities on Grand Canyon 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 Grand Canyon with a short position of General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Canyon and General Mills.

Diversification Opportunities for Grand Canyon and General Mills

-0.68

Correlation Coefficient

Grand Canyon  General Mills

Excellent diversification

The 3 months correlation between Grand and General is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills and Grand Canyon 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 Grand Canyon Education 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 Grand Canyon i.e., Grand Canyon and General Mills go up and down completely randomly.

Pair Corralation between Grand Canyon and General Mills

Assuming the 90 days trading horizon Grand Canyon Education is expected to generate 2.23 times more return on investment than General Mills. However, Grand Canyon is 2.23 times more volatile than General Mills. It trades about 0.13 of its potential returns per unit of risk. General Mills is currently generating about -0.09 per unit of risk. If you would invest  12,800  in Grand Canyon Education on September 24, 2024 and sell it today you would earn a total of  2,700  from holding Grand Canyon Education or generate 21.09% return on investment over 90 days.

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

Grand Canyon Education  vs.  General Mills

Grand Canyon Education

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Canyon Education are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Grand Canyon unveiled solid returns over the last few months and may actually be approaching a breakup point.

General Mills

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days General Mills has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Grand Canyon and General Mills

The main advantage of trading using opposite Grand Canyon and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Canyon 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 Grand Canyon Education 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.