Correlation Between GM and SV Investment
Can any of the company-specific risk be diversified away by investing in both GM and SV Investment 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 SV Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and SV Investment, you can compare the effects of market volatilities on GM and SV Investment 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 SV Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and SV Investment.
Diversification Opportunities for GM and SV Investment
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and 289080 is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and SV Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SV Investment 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 SV Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SV Investment has no effect on the direction of GM i.e., GM and SV Investment go up and down completely randomly.
Pair Corralation between GM and SV Investment
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the SV Investment. In addition to that, GM is 2.12 times more volatile than SV Investment. It trades about -0.15 of its total potential returns per unit of risk. SV Investment is currently generating about -0.3 per unit of volatility. If you would invest 138,800 in SV Investment on November 7, 2024 and sell it today you would lose (10,300) from holding SV Investment or give up 7.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
General Motors vs. SV Investment
Performance |
| Timeline |
| General Motors |
| SV Investment |
GM and SV Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and SV Investment
The main advantage of trading using opposite GM and SV Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, SV Investment 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 SV Investment will offset losses from the drop in SV Investment's long position.The idea behind General Motors and SV Investment 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.| SV Investment vs. Samsung Electronics Co | SV Investment vs. Hyundai Engineering Construction | SV Investment vs. Sungmoon Electronics Co | SV Investment vs. Daewoo Engineering Construction |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |