Correlation Between GM and Altice USA
Can any of the company-specific risk be diversified away by investing in both GM and Altice USA 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 Altice USA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Altice USA, you can compare the effects of market volatilities on GM and Altice USA 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 Altice USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Altice USA.
Diversification Opportunities for GM and Altice USA
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Altice is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Altice USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altice USA 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 Altice USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altice USA has no effect on the direction of GM i.e., GM and Altice USA go up and down completely randomly.
Pair Corralation between GM and Altice USA
Allowing for the 90-day total investment horizon GM is expected to generate 1.26 times less return on investment than Altice USA. But when comparing it to its historical volatility, General Motors is 2.36 times less risky than Altice USA. It trades about 0.07 of its potential returns per unit of risk. Altice USA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 249.00 in Altice USA on November 9, 2024 and sell it today you would earn a total of 44.00 from holding Altice USA or generate 17.67% 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. Altice USA
Performance |
| Timeline |
| General Motors |
| Altice USA |
GM and Altice USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Altice USA
The main advantage of trading using opposite GM and Altice USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Altice USA 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 Altice USA will offset losses from the drop in Altice USA's long position.The idea behind General Motors and Altice USA 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.| Altice USA vs. Liberty Broadband Srs | Altice USA vs. Cogent Communications Group | Altice USA vs. Charter Communications | Altice USA vs. Liberty Broadband Srs |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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