Correlation Between GM and Apple Rush
Can any of the company-specific risk be diversified away by investing in both GM and Apple Rush 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 Apple Rush into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Apple Rush, you can compare the effects of market volatilities on GM and Apple Rush 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 Apple Rush. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Apple Rush.
Diversification Opportunities for GM and Apple Rush
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Apple is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Apple Rush in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Rush 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 Apple Rush. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Rush has no effect on the direction of GM i.e., GM and Apple Rush go up and down completely randomly.
Pair Corralation between GM and Apple Rush
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.22 times more return on investment than Apple Rush. However, General Motors is 4.6 times less risky than Apple Rush. It trades about 0.25 of its potential returns per unit of risk. Apple Rush is currently generating about -0.02 per unit of risk. If you would invest 5,272 in General Motors on August 25, 2024 and sell it today you would earn a total of 581.00 from holding General Motors or generate 11.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Apple Rush
Performance |
| Timeline |
| General Motors |
| Apple Rush |
GM and Apple Rush Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Apple Rush
The main advantage of trading using opposite GM and Apple Rush positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Apple Rush 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 Apple Rush will offset losses from the drop in Apple Rush's long position.The idea behind General Motors and Apple Rush 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.| Apple Rush vs. National Beverage Corp | Apple Rush vs. Vita Coco | Apple Rush vs. Hill Street Beverage | Apple Rush vs. V 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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