Correlation Between GM and Grupo Hotelero
Can any of the company-specific risk be diversified away by investing in both GM and Grupo Hotelero 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 GM and Grupo Hotelero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Grupo Hotelero Santa, you can compare the effects of market volatilities on GM and Grupo Hotelero 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 GM with a short position of Grupo Hotelero. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Grupo Hotelero.
Diversification Opportunities for GM and Grupo Hotelero
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Grupo is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Grupo Hotelero Santa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Hotelero Santa and GM 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 are associated (or correlated) with Grupo Hotelero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Hotelero Santa has no effect on the direction of GM i.e., GM and Grupo Hotelero go up and down completely randomly.
Pair Corralation between GM and Grupo Hotelero
Assuming the 90 days horizon General Motors is expected to under-perform the Grupo Hotelero. In addition to that, GM is 1.5 times more volatile than Grupo Hotelero Santa. It trades about -0.21 of its total potential returns per unit of risk. Grupo Hotelero Santa is currently generating about -0.27 per unit of volatility. If you would invest 398.00 in Grupo Hotelero Santa on September 13, 2024 and sell it today you would lose (38.00) from holding Grupo Hotelero Santa or give up 9.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Grupo Hotelero Santa
Performance |
| Timeline |
| General Motors |
| Grupo Hotelero Santa |
GM and Grupo Hotelero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Grupo Hotelero
The main advantage of trading using opposite GM and Grupo Hotelero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Grupo Hotelero 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 Grupo Hotelero will offset losses from the drop in Grupo Hotelero's long position.| GM vs. Micron Technology | GM vs. Martin Marietta Materials | GM vs. DXC Technology | GM vs. Cognizant Technology Solutions |
| Grupo Hotelero vs. Costco Wholesale | Grupo Hotelero vs. Martin Marietta Materials | Grupo Hotelero vs. First Majestic Silver | Grupo Hotelero vs. Verizon Communications |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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