Correlation Between GM and Comstock Holding
Can any of the company-specific risk be diversified away by investing in both GM and Comstock Holding 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 Comstock Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Comstock Holding Companies, you can compare the effects of market volatilities on GM and Comstock Holding 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 Comstock Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Comstock Holding.
Diversification Opportunities for GM and Comstock Holding
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Comstock is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Comstock Holding Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comstock Holding Com 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 Comstock Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comstock Holding Com has no effect on the direction of GM i.e., GM and Comstock Holding go up and down completely randomly.
Pair Corralation between GM and Comstock Holding
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Comstock Holding. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 1.97 times less risky than Comstock Holding. The stock trades about -0.19 of its potential returns per unit of risk. The Comstock Holding Companies is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 830.00 in Comstock Holding Companies on September 19, 2024 and sell it today you would lose (95.00) from holding Comstock Holding Companies or give up 11.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
General Motors vs. Comstock Holding Companies
Performance |
| Timeline |
| General Motors |
| Comstock Holding Com |
GM and Comstock Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Comstock Holding
The main advantage of trading using opposite GM and Comstock Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Comstock Holding 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 Comstock Holding will offset losses from the drop in Comstock Holding's long position.The idea behind General Motors and Comstock Holding Companies 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.| Comstock Holding vs. GRUPO CARSO A1 | Comstock Holding vs. Elmos Semiconductor SE | Comstock Holding vs. Carsales | Comstock Holding vs. 24SEVENOFFICE GROUP AB |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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