Correlation Between GM and Assicurazioni Generali
Can any of the company-specific risk be diversified away by investing in both GM and Assicurazioni Generali 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 Assicurazioni Generali into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Assicurazioni Generali SpA, you can compare the effects of market volatilities on GM and Assicurazioni Generali 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 Assicurazioni Generali. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Assicurazioni Generali.
Diversification Opportunities for GM and Assicurazioni Generali
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GM and Assicurazioni is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Assicurazioni Generali SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assicurazioni Generali 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 Assicurazioni Generali. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assicurazioni Generali has no effect on the direction of GM i.e., GM and Assicurazioni Generali go up and down completely randomly.
Pair Corralation between GM and Assicurazioni Generali
Allowing for the 90-day total investment horizon GM is expected to generate 1.1 times less return on investment than Assicurazioni Generali. In addition to that, GM is 1.7 times more volatile than Assicurazioni Generali SpA. It trades about 0.05 of its total potential returns per unit of risk. Assicurazioni Generali SpA is currently generating about 0.1 per unit of volatility. If you would invest 1,532 in Assicurazioni Generali SpA on August 26, 2024 and sell it today you would earn a total of 1,150 from holding Assicurazioni Generali SpA or generate 75.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.22% |
| Values | Daily Returns |
General Motors vs. Assicurazioni Generali SpA
Performance |
| Timeline |
| General Motors |
| Assicurazioni Generali |
GM and Assicurazioni Generali Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Assicurazioni Generali
The main advantage of trading using opposite GM and Assicurazioni Generali positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Assicurazioni Generali 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 Assicurazioni Generali will offset losses from the drop in Assicurazioni Generali's long position.The idea behind General Motors and Assicurazioni Generali SpA 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.| Assicurazioni Generali vs. Tsingtao Brewery | Assicurazioni Generali vs. UNITED UTILITIES GR | Assicurazioni Generali vs. Lion Biotechnologies | Assicurazioni Generali vs. SCANSOURCE |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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