Correlation Between GM and Metro Investment
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By analyzing existing cross correlation between General Motors and Metro Investment Development, you can compare the effects of market volatilities on GM and Metro 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 Metro Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Metro Investment.
Diversification Opportunities for GM and Metro Investment
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Metro is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Metro Investment Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Investment Dev 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 Metro Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Investment Dev has no effect on the direction of GM i.e., GM and Metro Investment go up and down completely randomly.
Pair Corralation between GM and Metro Investment
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.6 times more return on investment than Metro Investment. However, General Motors is 1.66 times less risky than Metro Investment. It trades about 0.05 of its potential returns per unit of risk. Metro Investment Development is currently generating about 0.01 per unit of risk. If you would invest 3,778 in General Motors on September 2, 2024 and sell it today you would earn a total of 1,781 from holding General Motors or generate 47.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.37% |
| Values | Daily Returns |
General Motors vs. Metro Investment Development
Performance |
| Timeline |
| General Motors |
| Metro Investment Dev |
GM and Metro Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Metro Investment
The main advantage of trading using opposite GM and Metro Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Metro 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 Metro Investment will offset losses from the drop in Metro Investment's long position.The idea behind General Motors and Metro Investment Development 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.| Metro Investment vs. Guangzhou Tinci Materials | Metro Investment vs. Suzhou Xingye Material | Metro Investment vs. King Strong New Material | Metro Investment vs. Jiajia Food Group |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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