Correlation Between GM and TOPPS TILES
Can any of the company-specific risk be diversified away by investing in both GM and TOPPS TILES 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 TOPPS TILES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and TOPPS TILES PLC, you can compare the effects of market volatilities on GM and TOPPS TILES 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 TOPPS TILES. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and TOPPS TILES.
Diversification Opportunities for GM and TOPPS TILES
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and TOPPS is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and TOPPS TILES PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOPPS TILES PLC 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 TOPPS TILES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOPPS TILES PLC has no effect on the direction of GM i.e., GM and TOPPS TILES go up and down completely randomly.
Pair Corralation between GM and TOPPS TILES
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.65 times more return on investment than TOPPS TILES. However, GM is 1.65 times more volatile than TOPPS TILES PLC. It trades about 0.17 of its potential returns per unit of risk. TOPPS TILES PLC is currently generating about -0.26 per unit of risk. If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
General Motors vs. TOPPS TILES PLC
Performance |
| Timeline |
| General Motors |
| TOPPS TILES PLC |
GM and TOPPS TILES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and TOPPS TILES
The main advantage of trading using opposite GM and TOPPS TILES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, TOPPS TILES 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 TOPPS TILES will offset losses from the drop in TOPPS TILES's long position.The idea behind General Motors and TOPPS TILES PLC 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.| TOPPS TILES vs. Consolidated Communications Holdings | TOPPS TILES vs. Scandinavian Tobacco Group | TOPPS TILES vs. SEALED AIR | TOPPS TILES vs. Cogent Communications Holdings |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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