Correlation Between GM and Cognetivity Neurosciences
Can any of the company-specific risk be diversified away by investing in both GM and Cognetivity Neurosciences 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 Cognetivity Neurosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Cognetivity Neurosciences, you can compare the effects of market volatilities on GM and Cognetivity Neurosciences 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 Cognetivity Neurosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Cognetivity Neurosciences.
Diversification Opportunities for GM and Cognetivity Neurosciences
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Cognetivity is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Cognetivity Neurosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognetivity Neurosciences 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 Cognetivity Neurosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognetivity Neurosciences has no effect on the direction of GM i.e., GM and Cognetivity Neurosciences go up and down completely randomly.
Pair Corralation between GM and Cognetivity Neurosciences
Allowing for the 90-day total investment horizon GM is expected to generate 3.27 times less return on investment than Cognetivity Neurosciences. But when comparing it to its historical volatility, General Motors is 19.31 times less risky than Cognetivity Neurosciences. It trades about 0.26 of its potential returns per unit of risk. Cognetivity Neurosciences is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.60 in Cognetivity Neurosciences on August 27, 2024 and sell it today you would lose (0.30) from holding Cognetivity Neurosciences or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Cognetivity Neurosciences
Performance |
| Timeline |
| General Motors |
| Cognetivity Neurosciences |
GM and Cognetivity Neurosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Cognetivity Neurosciences
The main advantage of trading using opposite GM and Cognetivity Neurosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Cognetivity Neurosciences 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 Cognetivity Neurosciences will offset losses from the drop in Cognetivity Neurosciences' long position.The idea behind General Motors and Cognetivity Neurosciences 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.| Cognetivity Neurosciences vs. GE HealthCare Technologies | Cognetivity Neurosciences vs. Veeva Systems Class | Cognetivity Neurosciences vs. Solventum Corp | Cognetivity Neurosciences vs. HealthEquity |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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