Correlation Between GM and Atlantic Power
Can any of the company-specific risk be diversified away by investing in both GM and Atlantic Power 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 Atlantic Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Atlantic Power, you can compare the effects of market volatilities on GM and Atlantic Power 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 Atlantic Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Atlantic Power.
Diversification Opportunities for GM and Atlantic Power
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Atlantic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Atlantic Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic Power 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 Atlantic Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic Power has no effect on the direction of GM i.e., GM and Atlantic Power go up and down completely randomly.
Pair Corralation between GM and Atlantic Power
If you would invest 3,805 in General Motors on September 3, 2024 and sell it today you would earn a total of 1,754 from holding General Motors or generate 46.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
General Motors vs. Atlantic Power
Performance |
| Timeline |
| General Motors |
| Atlantic Power |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Atlantic Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Atlantic Power
The main advantage of trading using opposite GM and Atlantic Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Atlantic Power 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 Atlantic Power will offset losses from the drop in Atlantic Power's long position.The idea behind General Motors and Atlantic Power 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.| Atlantic Power vs. Gfl Environmental Holdings | Atlantic Power vs. Talon Metals Corp | Atlantic Power vs. Verizon Communications CDR | Atlantic Power vs. Datable Technology Corp |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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