Correlation Between GM and Camping World
Can any of the company-specific risk be diversified away by investing in both GM and Camping World 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 Camping World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Camping World Holdings, you can compare the effects of market volatilities on GM and Camping World 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 Camping World. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Camping World.
Diversification Opportunities for GM and Camping World
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GM and Camping is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Camping World Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camping World 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 Camping World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camping World Holdings has no effect on the direction of GM i.e., GM and Camping World go up and down completely randomly.
Pair Corralation between GM and Camping World
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Camping World. In addition to that, GM is 1.16 times more volatile than Camping World Holdings. It trades about -0.16 of its total potential returns per unit of risk. Camping World Holdings is currently generating about -0.08 per unit of volatility. If you would invest 2,259 in Camping World Holdings on September 18, 2024 and sell it today you would lose (93.50) from holding Camping World Holdings or give up 4.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Camping World Holdings
Performance |
| Timeline |
| General Motors |
| Camping World Holdings |
GM and Camping World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Camping World
The main advantage of trading using opposite GM and Camping World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Camping World 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 Camping World will offset losses from the drop in Camping World's long position.The idea behind General Motors and Camping World 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.| Camping World vs. Group 1 Automotive | Camping World vs. Sonic Automotive | Camping World vs. Penske Automotive Group | Camping World vs. Lithia Motors |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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