Correlation Between GM and Alliance Creative
Can any of the company-specific risk be diversified away by investing in both GM and Alliance Creative 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 Alliance Creative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Alliance Creative Gr, you can compare the effects of market volatilities on GM and Alliance Creative 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 Alliance Creative. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Alliance Creative.
Diversification Opportunities for GM and Alliance Creative
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Alliance is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Alliance Creative Gr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Creative 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 Alliance Creative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Creative has no effect on the direction of GM i.e., GM and Alliance Creative go up and down completely randomly.
Pair Corralation between GM and Alliance Creative
Allowing for the 90-day total investment horizon GM is expected to generate 4.27 times less return on investment than Alliance Creative. But when comparing it to its historical volatility, General Motors is 6.31 times less risky than Alliance Creative. It trades about 0.05 of its potential returns per unit of risk. Alliance Creative Gr is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 42.00 in Alliance Creative Gr on August 27, 2024 and sell it today you would lose (32.00) from holding Alliance Creative Gr or give up 76.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Alliance Creative Gr
Performance |
| Timeline |
| General Motors |
| Alliance Creative |
GM and Alliance Creative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Alliance Creative
The main advantage of trading using opposite GM and Alliance Creative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Alliance Creative 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 Alliance Creative will offset losses from the drop in Alliance Creative's long position.The idea behind General Motors and Alliance Creative Gr 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.| Alliance Creative vs. Avery Dennison Corp | Alliance Creative vs. Ardagh Metal Packaging | Alliance Creative vs. Ball Corporation | Alliance Creative vs. Eightco 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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