Correlation Between General Motors and Pets At
Can any of the company-specific risk be diversified away by investing in both General Motors and Pets At 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 Pets At 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 Pets at Home, you can compare the effects of market volatilities on General Motors and Pets At 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 Pets At. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Motors and Pets At.
Diversification Opportunities for General Motors and Pets At
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between General and Pets is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding General Motors Co and Pets at Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pets at Home 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 Pets At. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pets at Home has no effect on the direction of General Motors i.e., General Motors and Pets At go up and down completely randomly.
Pair Corralation between General Motors and Pets At
Assuming the 90 days trading horizon General Motors Co is expected to generate 1.39 times more return on investment than Pets At. However, General Motors is 1.39 times more volatile than Pets at Home. It trades about 0.08 of its potential returns per unit of risk. Pets at Home is currently generating about 0.05 per unit of risk. If you would invest 5,180 in General Motors Co on October 24, 2024 and sell it today you would earn a total of 160.00 from holding General Motors Co or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors Co vs. Pets at Home
Performance |
| Timeline |
| General Motors |
| Pets at Home |
General Motors and Pets At Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Motors and Pets At
The main advantage of trading using opposite General Motors and Pets At positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Motors position performs unexpectedly, Pets At 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 Pets At will offset losses from the drop in Pets At's long position.| General Motors vs. UNIQA Insurance Group | General Motors vs. Alien Metals | General Motors vs. Gaztransport et Technigaz | General Motors vs. Sparebank 1 SR |
| Pets At vs. Gaztransport et Technigaz | Pets At vs. SMA Solar Technology | Pets At vs. International Biotechnology Trust | Pets At vs. Ecclesiastical Insurance Office |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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