Correlation Between GM and Signaux Girod
Can any of the company-specific risk be diversified away by investing in both GM and Signaux Girod 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 Signaux Girod into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Signaux Girod, you can compare the effects of market volatilities on GM and Signaux Girod 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 Signaux Girod. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Signaux Girod.
Diversification Opportunities for GM and Signaux Girod
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GM and Signaux is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Signaux Girod in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signaux Girod 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 Signaux Girod. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signaux Girod has no effect on the direction of GM i.e., GM and Signaux Girod go up and down completely randomly.
Pair Corralation between GM and Signaux Girod
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.41 times more return on investment than Signaux Girod. However, GM is 1.41 times more volatile than Signaux Girod. It trades about 0.09 of its potential returns per unit of risk. Signaux Girod is currently generating about 0.01 per unit of risk. 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 Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Signaux Girod
Performance |
| Timeline |
| General Motors |
| Signaux Girod |
GM and Signaux Girod Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Signaux Girod
The main advantage of trading using opposite GM and Signaux Girod positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Signaux Girod 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 Signaux Girod will offset losses from the drop in Signaux Girod's long position.The idea behind General Motors and Signaux Girod 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.| Signaux Girod vs. Linedata Services SA | Signaux Girod vs. Axway Software | Signaux Girod vs. STMicroelectronics NV | Signaux Girod vs. Broadpeak 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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