Correlation Between GM and REDSUN PROPERTIES
Can any of the company-specific risk be diversified away by investing in both GM and REDSUN PROPERTIES 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 REDSUN PROPERTIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and REDSUN PROPERTIES GROUP, you can compare the effects of market volatilities on GM and REDSUN PROPERTIES 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 REDSUN PROPERTIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and REDSUN PROPERTIES.
Diversification Opportunities for GM and REDSUN PROPERTIES
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and REDSUN is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and REDSUN PROPERTIES GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REDSUN PROPERTIES 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 REDSUN PROPERTIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REDSUN PROPERTIES has no effect on the direction of GM i.e., GM and REDSUN PROPERTIES go up and down completely randomly.
Pair Corralation between GM and REDSUN PROPERTIES
Allowing for the 90-day total investment horizon GM is expected to generate 28.16 times less return on investment than REDSUN PROPERTIES. But when comparing it to its historical volatility, General Motors is 19.1 times less risky than REDSUN PROPERTIES. It trades about 0.1 of its potential returns per unit of risk. REDSUN PROPERTIES GROUP is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 0.10 in REDSUN PROPERTIES GROUP on September 2, 2024 and sell it today you would earn a total of 0.10 from holding REDSUN PROPERTIES GROUP or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.97% |
| Values | Daily Returns |
General Motors vs. REDSUN PROPERTIES GROUP
Performance |
| Timeline |
| General Motors |
| REDSUN PROPERTIES |
GM and REDSUN PROPERTIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and REDSUN PROPERTIES
The main advantage of trading using opposite GM and REDSUN PROPERTIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, REDSUN PROPERTIES 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 REDSUN PROPERTIES will offset losses from the drop in REDSUN PROPERTIES's long position.The idea behind General Motors and REDSUN PROPERTIES 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.| REDSUN PROPERTIES vs. SBA Communications Corp | REDSUN PROPERTIES vs. Verizon Communications | REDSUN PROPERTIES vs. Cogent Communications Holdings | REDSUN PROPERTIES vs. GREENX METALS LTD |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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