Correlation Between GM and Gemfields Group
Can any of the company-specific risk be diversified away by investing in both GM and Gemfields Group 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 Gemfields Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Gemfields Group Limited, you can compare the effects of market volatilities on GM and Gemfields Group 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 Gemfields Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Gemfields Group.
Diversification Opportunities for GM and Gemfields Group
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Gemfields is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Gemfields Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemfields Group 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 Gemfields Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemfields Group has no effect on the direction of GM i.e., GM and Gemfields Group go up and down completely randomly.
Pair Corralation between GM and Gemfields Group
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.44 times more return on investment than Gemfields Group. However, General Motors is 2.27 times less risky than Gemfields Group. It trades about 0.04 of its potential returns per unit of risk. Gemfields Group Limited is currently generating about -0.01 per unit of risk. If you would invest 3,568 in General Motors on October 13, 2024 and sell it today you would earn a total of 1,417 from holding General Motors or generate 39.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
General Motors vs. Gemfields Group Limited
Performance |
| Timeline |
| General Motors |
| Gemfields Group |
GM and Gemfields Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Gemfields Group
The main advantage of trading using opposite GM and Gemfields Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Gemfields Group 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 Gemfields Group will offset losses from the drop in Gemfields Group's long position.| GM vs. Canoo Inc | GM vs. Aquagold International | GM vs. Morningstar Unconstrained Allocation | GM vs. Thrivent High Yield |
| Gemfields Group vs. Sixt Leasing SE | Gemfields Group vs. MidCap Financial Investment | Gemfields Group vs. USU Software AG | Gemfields Group vs. ALBIS LEASING AG |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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