Correlation Between General Motors and Pfeiffer Vacuum
Can any of the company-specific risk be diversified away by investing in both General Motors and Pfeiffer Vacuum 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 Motors and Pfeiffer Vacuum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors Co and Pfeiffer Vacuum Technology, you can compare the effects of market volatilities on General Motors and Pfeiffer Vacuum 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 Motors with a short position of Pfeiffer Vacuum. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Motors and Pfeiffer Vacuum.
Diversification Opportunities for General Motors and Pfeiffer Vacuum
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between General and Pfeiffer is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding General Motors Co and Pfeiffer Vacuum Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfeiffer Vacuum Tech and General Motors 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 Motors Co are associated (or correlated) with Pfeiffer Vacuum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfeiffer Vacuum Tech has no effect on the direction of General Motors i.e., General Motors and Pfeiffer Vacuum go up and down completely randomly.
Pair Corralation between General Motors and Pfeiffer Vacuum
Assuming the 90 days trading horizon General Motors Co is expected to under-perform the Pfeiffer Vacuum. In addition to that, General Motors is 6.28 times more volatile than Pfeiffer Vacuum Technology. It trades about -0.16 of its total potential returns per unit of risk. Pfeiffer Vacuum Technology is currently generating about -0.02 per unit of volatility. If you would invest 15,440 in Pfeiffer Vacuum Technology on September 13, 2024 and sell it today you would lose (30.00) from holding Pfeiffer Vacuum Technology or give up 0.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
General Motors Co vs. Pfeiffer Vacuum Technology
Performance |
| Timeline |
| General Motors |
| Pfeiffer Vacuum Tech |
General Motors and Pfeiffer Vacuum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Motors and Pfeiffer Vacuum
The main advantage of trading using opposite General Motors and Pfeiffer Vacuum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Motors position performs unexpectedly, Pfeiffer Vacuum 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 Pfeiffer Vacuum will offset losses from the drop in Pfeiffer Vacuum's long position.| General Motors vs. Ryanair Holdings plc | General Motors vs. Delta Air Lines | General Motors vs. United Utilities Group | General Motors vs. Jacquet Metal Service |
| Pfeiffer Vacuum vs. Bank of Ireland | Pfeiffer Vacuum vs. Monster Beverage Corp | Pfeiffer Vacuum vs. MoneysupermarketCom Group PLC | Pfeiffer Vacuum vs. Alior Bank SA |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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