Correlation Between GM and Airborne Wireless
Can any of the company-specific risk be diversified away by investing in both GM and Airborne Wireless 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 Airborne Wireless into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Airborne Wireless Network, you can compare the effects of market volatilities on GM and Airborne Wireless 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 Airborne Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Airborne Wireless.
Diversification Opportunities for GM and Airborne Wireless
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GM and Airborne is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Airborne Wireless Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airborne Wireless Network 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 Airborne Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airborne Wireless Network has no effect on the direction of GM i.e., GM and Airborne Wireless go up and down completely randomly.
Pair Corralation between GM and Airborne Wireless
If you would invest 0.01 in Airborne Wireless Network on September 13, 2024 and sell it today you would earn a total of 0.00 from holding Airborne Wireless Network or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Airborne Wireless Network
Performance |
| Timeline |
| General Motors |
| Airborne Wireless Network |
GM and Airborne Wireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Airborne Wireless
The main advantage of trading using opposite GM and Airborne Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Airborne Wireless 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 Airborne Wireless will offset losses from the drop in Airborne Wireless' long position.The idea behind General Motors and Airborne Wireless Network 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.| Airborne Wireless vs. Papaya Growth Opportunity | Airborne Wireless vs. HUMANA INC | Airborne Wireless vs. Barloworld Ltd ADR | Airborne Wireless vs. Morningstar Unconstrained Allocation |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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