Correlation Between GM and 1inch
Can any of the company-specific risk be diversified away by investing in both GM and 1inch 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 1inch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and 1inch, you can compare the effects of market volatilities on GM and 1inch 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 1inch. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and 1inch.
Diversification Opportunities for GM and 1inch
Poor diversification
The 3 months correlation between GM and 1inch is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and 1inch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1inch 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 1inch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1inch has no effect on the direction of GM i.e., GM and 1inch go up and down completely randomly.
Pair Corralation between GM and 1inch
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.63 times more return on investment than 1inch. However, General Motors is 1.58 times less risky than 1inch. It trades about -0.06 of its potential returns per unit of risk. 1inch is currently generating about -0.13 per unit of risk. If you would invest 4,828 in General Motors on January 10, 2025 and sell it today you would lose (254.00) from holding General Motors or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. 1inch
Performance |
| Timeline |
| General Motors |
| 1inch |
GM and 1inch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and 1inch
The main advantage of trading using opposite GM and 1inch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, 1inch 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 1inch will offset losses from the drop in 1inch's long position.The idea behind General Motors and 1inch 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.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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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