Correlation Between GM and PHN Canadian
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By analyzing existing cross correlation between General Motors and PHN Canadian Equity, you can compare the effects of market volatilities on GM and PHN Canadian 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 PHN Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and PHN Canadian.
Diversification Opportunities for GM and PHN Canadian
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and PHN is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and PHN Canadian Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHN Canadian Equity 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 PHN Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHN Canadian Equity has no effect on the direction of GM i.e., GM and PHN Canadian go up and down completely randomly.
Pair Corralation between GM and PHN Canadian
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.98 times more return on investment than PHN Canadian. However, GM is 2.98 times more volatile than PHN Canadian Equity. It trades about 0.05 of its potential returns per unit of risk. PHN Canadian Equity is currently generating about 0.06 per unit of risk. If you would invest 3,807 in General Motors on August 26, 2024 and sell it today you would earn a total of 2,046 from holding General Motors or generate 53.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
General Motors vs. PHN Canadian Equity
Performance |
| Timeline |
| General Motors |
| PHN Canadian Equity |
GM and PHN Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and PHN Canadian
The main advantage of trading using opposite GM and PHN Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, PHN Canadian 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 PHN Canadian will offset losses from the drop in PHN Canadian's long position.The idea behind General Motors and PHN Canadian Equity 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.| PHN Canadian vs. Fidelity Tactical High | PHN Canadian vs. Bloom Select Income | PHN Canadian vs. Mawer Canadien obligations | PHN Canadian vs. Symphony Floating Rate |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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