Correlation Between G2D Investments and General Motors
Can any of the company-specific risk be diversified away by investing in both G2D Investments and General Motors 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 G2D Investments and General Motors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G2D Investments and General Motors, you can compare the effects of market volatilities on G2D Investments and General Motors 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 G2D Investments with a short position of General Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of G2D Investments and General Motors.
Diversification Opportunities for G2D Investments and General Motors
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between G2D and General is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding G2D Investments and General Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Motors and G2D Investments 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 G2D Investments are associated (or correlated) with General Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Motors has no effect on the direction of G2D Investments i.e., G2D Investments and General Motors go up and down completely randomly.
Pair Corralation between G2D Investments and General Motors
Assuming the 90 days trading horizon G2D Investments is expected to under-perform the General Motors. But the stock apears to be less risky and, when comparing its historical volatility, G2D Investments is 1.7 times less risky than General Motors. The stock trades about -0.19 of its potential returns per unit of risk. The General Motors is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 8,268 in General Motors on September 12, 2024 and sell it today you would lose (149.00) from holding General Motors or give up 1.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G2D Investments vs. General Motors
Performance |
| Timeline |
| G2D Investments |
| General Motors |
G2D Investments and General Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G2D Investments and General Motors
The main advantage of trading using opposite G2D Investments and General Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G2D Investments position performs unexpectedly, General Motors 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 Motors will offset losses from the drop in General Motors' long position.| G2D Investments vs. Paycom Software | G2D Investments vs. United States Steel | G2D Investments vs. BIONTECH SE DRN | G2D Investments vs. Taiwan Semiconductor Manufacturing |
| General Motors vs. Unifique Telecomunicaes SA | General Motors vs. Delta Air Lines | General Motors vs. Charter Communications | General Motors vs. Autohome |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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