Correlation Between GM and Arrow Home
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By analyzing existing cross correlation between General Motors and Arrow Home Group, you can compare the effects of market volatilities on GM and Arrow Home 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 Arrow Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Arrow Home.
Diversification Opportunities for GM and Arrow Home
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Arrow is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Arrow Home Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Home Group 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 Arrow Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Home Group has no effect on the direction of GM i.e., GM and Arrow Home go up and down completely randomly.
Pair Corralation between GM and Arrow Home
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.7 times more return on investment than Arrow Home. However, General Motors is 1.42 times less risky than Arrow Home. It trades about 0.2 of its potential returns per unit of risk. Arrow Home Group is currently generating about 0.07 per unit of risk. If you would invest 4,807 in General Motors on August 25, 2024 and sell it today you would earn a total of 1,046 from holding General Motors or generate 21.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 88.89% |
| Values | Daily Returns |
General Motors vs. Arrow Home Group
Performance |
| Timeline |
| General Motors |
| Arrow Home Group |
GM and Arrow Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Arrow Home
The main advantage of trading using opposite GM and Arrow Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Arrow Home 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 Arrow Home will offset losses from the drop in Arrow Home's long position.The idea behind General Motors and Arrow Home Group 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.| Arrow Home vs. Zhongtong Guomai Communication | Arrow Home vs. Guangdong Shenglu Telecommunication | Arrow Home vs. HanS Laser Tech | Arrow Home vs. Changchun Faway Automobile |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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