Correlation Between GM and Equitable Holdings
Can any of the company-specific risk be diversified away by investing in both GM and Equitable Holdings 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 Equitable Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Equitable Holdings, you can compare the effects of market volatilities on GM and Equitable Holdings 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 Equitable Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Equitable Holdings.
Diversification Opportunities for GM and Equitable Holdings
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Equitable is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Equitable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Holdings 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 Equitable Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Holdings has no effect on the direction of GM i.e., GM and Equitable Holdings go up and down completely randomly.
Pair Corralation between GM and Equitable Holdings
Allowing for the 90-day total investment horizon GM is expected to generate 2.33 times less return on investment than Equitable Holdings. In addition to that, GM is 1.14 times more volatile than Equitable Holdings. It trades about 0.04 of its total potential returns per unit of risk. Equitable Holdings is currently generating about 0.11 per unit of volatility. If you would invest 2,126 in Equitable Holdings on November 27, 2024 and sell it today you would earn a total of 2,714 from holding Equitable Holdings or generate 127.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.33% |
| Values | Daily Returns |
General Motors vs. Equitable Holdings
Performance |
| Timeline |
| General Motors |
| Equitable Holdings |
GM and Equitable Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Equitable Holdings
The main advantage of trading using opposite GM and Equitable Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Equitable Holdings 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 Equitable Holdings will offset losses from the drop in Equitable Holdings' long position.The idea behind General Motors and Equitable Holdings 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.| Equitable Holdings vs. Waste Management | Equitable Holdings vs. OFFICE DEPOT | Equitable Holdings vs. CITY OFFICE REIT | Equitable Holdings vs. Cleanaway Waste Management |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |