Correlation Between GM and Ren Redes
Can any of the company-specific risk be diversified away by investing in both GM and Ren Redes 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 Ren Redes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Ren Redes Energeticas, you can compare the effects of market volatilities on GM and Ren Redes 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 Ren Redes. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Ren Redes.
Diversification Opportunities for GM and Ren Redes
Very good diversification
The 3 months correlation between GM and Ren is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Ren Redes Energeticas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ren Redes Energeticas 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 Ren Redes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ren Redes Energeticas has no effect on the direction of GM i.e., GM and Ren Redes go up and down completely randomly.
Pair Corralation between GM and Ren Redes
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Ren Redes. In addition to that, GM is 2.37 times more volatile than Ren Redes Energeticas. It trades about -0.09 of its total potential returns per unit of risk. Ren Redes Energeticas is currently generating about 0.34 per unit of volatility. If you would invest 236.00 in Ren Redes Energeticas on November 29, 2024 and sell it today you would earn a total of 12.00 from holding Ren Redes Energeticas or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Ren Redes Energeticas
Performance |
| Timeline |
| General Motors |
| Ren Redes Energeticas |
GM and Ren Redes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Ren Redes
The main advantage of trading using opposite GM and Ren Redes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Ren Redes 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 Ren Redes will offset losses from the drop in Ren Redes' long position.The idea behind General Motors and Ren Redes Energeticas 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.| Ren Redes vs. Fulcrum Metals PLC | Ren Redes vs. Cornish Metals | Ren Redes vs. Atalaya Mining | Ren Redes vs. Vitec Software Group |
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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