Correlation Between GM and Audio Communications
Can any of the company-specific risk be diversified away by investing in both GM and Audio Communications 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 Audio Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Audio Communications Network, you can compare the effects of market volatilities on GM and Audio Communications 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 Audio Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Audio Communications.
Diversification Opportunities for GM and Audio Communications
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Audio is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Audio Communications Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Audio Communications 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 Audio Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Audio Communications has no effect on the direction of GM i.e., GM and Audio Communications go up and down completely randomly.
Pair Corralation between GM and Audio Communications
If you would invest 3,805 in General Motors on September 3, 2024 and sell it today you would earn a total of 1,699 from holding General Motors or generate 44.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
General Motors vs. Audio Communications Network
Performance |
| Timeline |
| General Motors |
| Audio Communications |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Audio Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Audio Communications
The main advantage of trading using opposite GM and Audio Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Audio Communications 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 Audio Communications will offset losses from the drop in Audio Communications' long position.The idea behind General Motors and Audio Communications 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.| Audio Communications vs. GMS Inc | Audio Communications vs. Cedar Realty Trust | Audio Communications vs. SunLink Health Systems | Audio Communications vs. Kite Realty Group |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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