Correlation Between GM and Eiffage SA
Can any of the company-specific risk be diversified away by investing in both GM and Eiffage SA 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 Eiffage SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Eiffage SA, you can compare the effects of market volatilities on GM and Eiffage SA 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 Eiffage SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Eiffage SA.
Diversification Opportunities for GM and Eiffage SA
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Eiffage is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Eiffage SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eiffage SA 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 Eiffage SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eiffage SA has no effect on the direction of GM i.e., GM and Eiffage SA go up and down completely randomly.
Pair Corralation between GM and Eiffage SA
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.97 times more return on investment than Eiffage SA. However, GM is 1.97 times more volatile than Eiffage SA. It trades about 0.2 of its potential returns per unit of risk. Eiffage SA is currently generating about -0.1 per unit of risk. If you would invest 4,484 in General Motors on August 30, 2024 and sell it today you would earn a total of 1,066 from holding General Motors or generate 23.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Eiffage SA
Performance |
| Timeline |
| General Motors |
| Eiffage SA |
GM and Eiffage SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Eiffage SA
The main advantage of trading using opposite GM and Eiffage SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Eiffage SA 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 Eiffage SA will offset losses from the drop in Eiffage SA's long position.The idea behind General Motors and Eiffage SA 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.| Eiffage SA vs. Indutrade AB | Eiffage SA vs. LPKF Laser Electronics | Eiffage SA vs. TechnipFMC PLC | Eiffage SA vs. Allianz Technology Trust |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |