Correlation Between GM and Avax Techs
Can any of the company-specific risk be diversified away by investing in both GM and Avax Techs 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 Avax Techs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Avax Techs, you can compare the effects of market volatilities on GM and Avax Techs 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 Avax Techs. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Avax Techs.
Diversification Opportunities for GM and Avax Techs
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Avax is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Avax Techs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avax Techs 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 Avax Techs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avax Techs has no effect on the direction of GM i.e., GM and Avax Techs go up and down completely randomly.
Pair Corralation between GM and Avax Techs
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.46 times more return on investment than Avax Techs. However, General Motors is 2.19 times less risky than Avax Techs. It trades about 0.05 of its potential returns per unit of risk. Avax Techs is currently generating about -0.04 per unit of risk. If you would invest 3,807 in General Motors on August 25, 2024 and sell it today you would earn a total of 2,046 from holding General Motors or generate 53.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
General Motors vs. Avax Techs
Performance |
| Timeline |
| General Motors |
| Avax Techs |
GM and Avax Techs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Avax Techs
The main advantage of trading using opposite GM and Avax Techs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Avax Techs 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 Avax Techs will offset losses from the drop in Avax Techs' long position.The idea behind General Motors and Avax Techs 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.| Avax Techs vs. Eliem Therapeutics | Avax Techs vs. HCW Biologics | Avax Techs vs. Scpharmaceuticals | Avax Techs vs. Milestone Pharmaceuticals |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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