Correlation Between GM and FreelanceCom
Can any of the company-specific risk be diversified away by investing in both GM and FreelanceCom 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 FreelanceCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and FreelanceCom, you can compare the effects of market volatilities on GM and FreelanceCom 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 FreelanceCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and FreelanceCom.
Diversification Opportunities for GM and FreelanceCom
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and FreelanceCom is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and FreelanceCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FreelanceCom 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 FreelanceCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FreelanceCom has no effect on the direction of GM i.e., GM and FreelanceCom go up and down completely randomly.
Pair Corralation between GM and FreelanceCom
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the FreelanceCom. In addition to that, GM is 1.05 times more volatile than FreelanceCom. It trades about -0.16 of its total potential returns per unit of risk. FreelanceCom is currently generating about 0.02 per unit of volatility. If you would invest 280.00 in FreelanceCom on September 19, 2024 and sell it today you would earn a total of 2.00 from holding FreelanceCom or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. FreelanceCom
Performance |
| Timeline |
| General Motors |
| FreelanceCom |
GM and FreelanceCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and FreelanceCom
The main advantage of trading using opposite GM and FreelanceCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, FreelanceCom 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 FreelanceCom will offset losses from the drop in FreelanceCom's long position.The idea behind General Motors and FreelanceCom 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.| FreelanceCom vs. Claranova SE | FreelanceCom vs. SA Catana Group | FreelanceCom vs. Mediantechn | FreelanceCom vs. Groupe LDLC SA |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |