Correlation Between GM and Industrial Urban
Can any of the company-specific risk be diversified away by investing in both GM and Industrial Urban 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 Industrial Urban into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Industrial Urban Development, you can compare the effects of market volatilities on GM and Industrial Urban 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 Industrial Urban. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Industrial Urban.
Diversification Opportunities for GM and Industrial Urban
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Industrial is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Industrial Urban Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Urban Dev 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 Industrial Urban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Urban Dev has no effect on the direction of GM i.e., GM and Industrial Urban go up and down completely randomly.
Pair Corralation between GM and Industrial Urban
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Industrial Urban. In addition to that, GM is 1.37 times more volatile than Industrial Urban Development. It trades about -0.06 of its total potential returns per unit of risk. Industrial Urban Development is currently generating about 0.25 per unit of volatility. If you would invest 3,170,000 in Industrial Urban Development on November 4, 2024 and sell it today you would earn a total of 290,000 from holding Industrial Urban Development or generate 9.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.0% |
| Values | Daily Returns |
General Motors vs. Industrial Urban Development
Performance |
| Timeline |
| General Motors |
| Industrial Urban Dev |
GM and Industrial Urban Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Industrial Urban
The main advantage of trading using opposite GM and Industrial Urban positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Industrial Urban 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 Industrial Urban will offset losses from the drop in Industrial Urban's long position.The idea behind General Motors and Industrial Urban Development 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.| Industrial Urban vs. Vu Dang Investment | Industrial Urban vs. Tien Giang Investment | Industrial Urban vs. HVC Investment and | Industrial Urban vs. Construction And Investment |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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