Correlation Between GM and DICKER DATA
Can any of the company-specific risk be diversified away by investing in both GM and DICKER DATA 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 DICKER DATA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and DICKER DATA LTD, you can compare the effects of market volatilities on GM and DICKER DATA 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 DICKER DATA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and DICKER DATA.
Diversification Opportunities for GM and DICKER DATA
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and DICKER is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and DICKER DATA LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DICKER DATA LTD 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 DICKER DATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DICKER DATA LTD has no effect on the direction of GM i.e., GM and DICKER DATA go up and down completely randomly.
Pair Corralation between GM and DICKER DATA
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.33 times more return on investment than DICKER DATA. However, GM is 1.33 times more volatile than DICKER DATA LTD. It trades about 0.08 of its potential returns per unit of risk. DICKER DATA LTD is currently generating about -0.11 per unit of risk. If you would invest 4,893 in General Motors on August 28, 2024 and sell it today you would earn a total of 586.00 from holding General Motors or generate 11.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. DICKER DATA LTD
Performance |
| Timeline |
| General Motors |
| DICKER DATA LTD |
GM and DICKER DATA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and DICKER DATA
The main advantage of trading using opposite GM and DICKER DATA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, DICKER DATA 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 DICKER DATA will offset losses from the drop in DICKER DATA's long position.The idea behind General Motors and DICKER DATA LTD 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.| DICKER DATA vs. Burlington Stores | DICKER DATA vs. American Homes 4 | DICKER DATA vs. Beazer Homes USA | DICKER DATA vs. MARKET VECTR RETAIL |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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