Correlation Between GM and Alabama Aircraft
Can any of the company-specific risk be diversified away by investing in both GM and Alabama Aircraft 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 Alabama Aircraft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Alabama Aircraft Industries, you can compare the effects of market volatilities on GM and Alabama Aircraft 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 Alabama Aircraft. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Alabama Aircraft.
Diversification Opportunities for GM and Alabama Aircraft
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Alabama is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Alabama Aircraft Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alabama Aircraft Ind 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 Alabama Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alabama Aircraft Ind has no effect on the direction of GM i.e., GM and Alabama Aircraft go up and down completely randomly.
Pair Corralation between GM and Alabama Aircraft
If you would invest 4,551 in General Motors on September 1, 2024 and sell it today you would earn a total of 1,008 from holding General Motors or generate 22.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 0.79% |
| Values | Daily Returns |
General Motors vs. Alabama Aircraft Industries
Performance |
| Timeline |
| General Motors |
| Alabama Aircraft Ind |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Alabama Aircraft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Alabama Aircraft
The main advantage of trading using opposite GM and Alabama Aircraft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Alabama Aircraft 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 Alabama Aircraft will offset losses from the drop in Alabama Aircraft's long position.The idea behind General Motors and Alabama Aircraft Industries 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.| Alabama Aircraft vs. RBC Bearings Incorporated | Alabama Aircraft vs. Treasury Wine Estates | Alabama Aircraft vs. Naked Wines plc | Alabama Aircraft vs. Merit Medical Systems |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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