Correlation Between GM and Nantex Industry
Can any of the company-specific risk be diversified away by investing in both GM and Nantex Industry 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 Nantex Industry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Nantex Industry Co, you can compare the effects of market volatilities on GM and Nantex Industry 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 Nantex Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Nantex Industry.
Diversification Opportunities for GM and Nantex Industry
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Nantex is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Nantex Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nantex Industry 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 Nantex Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nantex Industry has no effect on the direction of GM i.e., GM and Nantex Industry go up and down completely randomly.
Pair Corralation between GM and Nantex Industry
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.74 times more return on investment than Nantex Industry. However, GM is 1.74 times more volatile than Nantex Industry Co. It trades about 0.19 of its potential returns per unit of risk. Nantex Industry Co is currently generating about -0.12 per unit of risk. If you would invest 4,484 in General Motors on August 29, 2024 and sell it today you would earn a total of 995.00 from holding General Motors or generate 22.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.35% |
| Values | Daily Returns |
General Motors vs. Nantex Industry Co
Performance |
| Timeline |
| General Motors |
| Nantex Industry |
GM and Nantex Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Nantex Industry
The main advantage of trading using opposite GM and Nantex Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Nantex Industry 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 Nantex Industry will offset losses from the drop in Nantex Industry's long position.The idea behind General Motors and Nantex Industry Co 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.| Nantex Industry vs. International CSRC Investment | Nantex Industry vs. TSRC Corp | Nantex Industry vs. Ruentex Industries | Nantex Industry vs. Cheng Shin Rubber |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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