Correlation Between GM and Amedeo Air
Can any of the company-specific risk be diversified away by investing in both GM and Amedeo Air 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 Amedeo Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Amedeo Air Four, you can compare the effects of market volatilities on GM and Amedeo Air 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 Amedeo Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Amedeo Air.
Diversification Opportunities for GM and Amedeo Air
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Amedeo is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Amedeo Air Four in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amedeo Air Four 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 Amedeo Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amedeo Air Four has no effect on the direction of GM i.e., GM and Amedeo Air go up and down completely randomly.
Pair Corralation between GM and Amedeo Air
Allowing for the 90-day total investment horizon General Motors is expected to generate 4.37 times more return on investment than Amedeo Air. However, GM is 4.37 times more volatile than Amedeo Air Four. It trades about 0.17 of its potential returns per unit of risk. Amedeo Air Four is currently generating about 0.51 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 Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Amedeo Air Four
Performance |
| Timeline |
| General Motors |
| Amedeo Air Four |
GM and Amedeo Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Amedeo Air
The main advantage of trading using opposite GM and Amedeo Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Amedeo Air 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 Amedeo Air will offset losses from the drop in Amedeo Air's long position.The idea behind General Motors and Amedeo Air Four 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.| Amedeo Air vs. Samsung Electronics Co | Amedeo Air vs. Samsung Electronics Co | Amedeo Air vs. Hyundai Motor | Amedeo Air vs. Toyota Motor Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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