Correlation Between GM and DCB MERCIAL
Can any of the company-specific risk be diversified away by investing in both GM and DCB MERCIAL 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 DCB MERCIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and DCB MERCIAL BANK, you can compare the effects of market volatilities on GM and DCB MERCIAL 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 DCB MERCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and DCB MERCIAL.
Diversification Opportunities for GM and DCB MERCIAL
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and DCB is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and DCB MERCIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DCB MERCIAL BANK 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 DCB MERCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DCB MERCIAL BANK has no effect on the direction of GM i.e., GM and DCB MERCIAL go up and down completely randomly.
Pair Corralation between GM and DCB MERCIAL
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the DCB MERCIAL. In addition to that, GM is 1.35 times more volatile than DCB MERCIAL BANK. It trades about -0.13 of its total potential returns per unit of risk. DCB MERCIAL BANK is currently generating about 0.12 per unit of volatility. If you would invest 13,500 in DCB MERCIAL BANK on November 5, 2024 and sell it today you would earn a total of 500.00 from holding DCB MERCIAL BANK or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 80.0% |
| Values | Daily Returns |
General Motors vs. DCB MERCIAL BANK
Performance |
| Timeline |
| General Motors |
| DCB MERCIAL BANK |
GM and DCB MERCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and DCB MERCIAL
The main advantage of trading using opposite GM and DCB MERCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, DCB MERCIAL 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 DCB MERCIAL will offset losses from the drop in DCB MERCIAL's long position.The idea behind General Motors and DCB MERCIAL BANK 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.| DCB MERCIAL vs. YETU MICROFINANCE PLC | DCB MERCIAL vs. CRDB BANK LTD | DCB MERCIAL vs. NATION MEDIA GROUP | DCB MERCIAL vs. MWALIMU MERCIAL BANK |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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