Correlation Between GM and Active Health
Can any of the company-specific risk be diversified away by investing in both GM and Active Health 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 Active Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Active Health Foods, you can compare the effects of market volatilities on GM and Active Health 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 Active Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Active Health.
Diversification Opportunities for GM and Active Health
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Active is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Active Health Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Active Health Foods 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 Active Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Active Health Foods has no effect on the direction of GM i.e., GM and Active Health go up and down completely randomly.
Pair Corralation between GM and Active Health
If you would invest 5,273 in General Motors on August 29, 2024 and sell it today you would earn a total of 277.00 from holding General Motors or generate 5.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
General Motors vs. Active Health Foods
Performance |
| Timeline |
| General Motors |
| Active Health Foods |
GM and Active Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Active Health
The main advantage of trading using opposite GM and Active Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Active Health 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 Active Health will offset losses from the drop in Active Health's long position.The idea behind General Motors and Active Health Foods 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.| Active Health vs. Embotelladora Andina SA | Active Health vs. Signet International Holdings | Active Health vs. National Beverage Corp | Active Health vs. PT Astra International |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |