Correlation Between GM and Airlie Australian
Can any of the company-specific risk be diversified away by investing in both GM and Airlie Australian 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 Airlie Australian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Airlie Australian Share, you can compare the effects of market volatilities on GM and Airlie Australian 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 Airlie Australian. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Airlie Australian.
Diversification Opportunities for GM and Airlie Australian
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and Airlie is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Airlie Australian Share in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airlie Australian Share 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 Airlie Australian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airlie Australian Share has no effect on the direction of GM i.e., GM and Airlie Australian go up and down completely randomly.
Pair Corralation between GM and Airlie Australian
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.73 times more return on investment than Airlie Australian. However, GM is 2.73 times more volatile than Airlie Australian Share. It trades about 0.09 of its potential returns per unit of risk. Airlie Australian Share is currently generating about 0.05 per unit of risk. If you would invest 4,044 in General Motors on September 1, 2024 and sell it today you would earn a total of 1,515 from holding General Motors or generate 37.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.43% |
| Values | Daily Returns |
General Motors vs. Airlie Australian Share
Performance |
| Timeline |
| General Motors |
| Airlie Australian Share |
GM and Airlie Australian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Airlie Australian
The main advantage of trading using opposite GM and Airlie Australian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Airlie Australian 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 Airlie Australian will offset losses from the drop in Airlie Australian's long position.The idea behind General Motors and Airlie Australian Share 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.| Airlie Australian vs. iShares MSCI Emerging | Airlie Australian vs. Global X Hydrogen | Airlie Australian vs. Janus Henderson Sustainable | Airlie Australian vs. JPMorgan Equity Premium |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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