Correlation Between GM and MERCK Kommanditgesells
Can any of the company-specific risk be diversified away by investing in both GM and MERCK Kommanditgesells 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 MERCK Kommanditgesells into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and MERCK Kommanditgesellschaft auf, you can compare the effects of market volatilities on GM and MERCK Kommanditgesells 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 MERCK Kommanditgesells. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and MERCK Kommanditgesells.
Diversification Opportunities for GM and MERCK Kommanditgesells
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and MERCK is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and MERCK Kommanditgesellschaft au in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MERCK Kommanditgesells 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 MERCK Kommanditgesells. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MERCK Kommanditgesells has no effect on the direction of GM i.e., GM and MERCK Kommanditgesells go up and down completely randomly.
Pair Corralation between GM and MERCK Kommanditgesells
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.55 times more return on investment than MERCK Kommanditgesells. However, GM is 1.55 times more volatile than MERCK Kommanditgesellschaft auf. It trades about 0.08 of its potential returns per unit of risk. MERCK Kommanditgesellschaft auf is currently generating about -0.2 per unit of risk. If you would invest 4,966 in General Motors on August 30, 2024 and sell it today you would earn a total of 584.00 from holding General Motors or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
General Motors vs. MERCK Kommanditgesellschaft au
Performance |
| Timeline |
| General Motors |
| MERCK Kommanditgesells |
GM and MERCK Kommanditgesells Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and MERCK Kommanditgesells
The main advantage of trading using opposite GM and MERCK Kommanditgesells positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, MERCK Kommanditgesells 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 MERCK Kommanditgesells will offset losses from the drop in MERCK Kommanditgesells' long position.The idea behind General Motors and MERCK Kommanditgesellschaft auf 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.| MERCK Kommanditgesells vs. Ross Stores | MERCK Kommanditgesells vs. Axfood AB | MERCK Kommanditgesells vs. Supermarket Income REIT | MERCK Kommanditgesells vs. Sligro Food 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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