Correlation Between GM and DoubleDragon Properties
Can any of the company-specific risk be diversified away by investing in both GM and DoubleDragon Properties 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 DoubleDragon Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and DoubleDragon Properties Corp, you can compare the effects of market volatilities on GM and DoubleDragon Properties 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 DoubleDragon Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and DoubleDragon Properties.
Diversification Opportunities for GM and DoubleDragon Properties
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GM and DoubleDragon is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and DoubleDragon Properties Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DoubleDragon Properties 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 DoubleDragon Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DoubleDragon Properties has no effect on the direction of GM i.e., GM and DoubleDragon Properties go up and down completely randomly.
Pair Corralation between GM and DoubleDragon Properties
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.8 times more return on investment than DoubleDragon Properties. However, General Motors is 1.26 times less risky than DoubleDragon Properties. It trades about 0.13 of its potential returns per unit of risk. DoubleDragon Properties Corp is currently generating about 0.07 per unit of risk. If you would invest 2,879 in General Motors on September 1, 2024 and sell it today you would earn a total of 2,680 from holding General Motors or generate 93.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.14% |
| Values | Daily Returns |
General Motors vs. DoubleDragon Properties Corp
Performance |
| Timeline |
| General Motors |
| DoubleDragon Properties |
GM and DoubleDragon Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and DoubleDragon Properties
The main advantage of trading using opposite GM and DoubleDragon Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, DoubleDragon Properties 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 DoubleDragon Properties will offset losses from the drop in DoubleDragon Properties' long position.The idea behind General Motors and DoubleDragon Properties Corp 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.| DoubleDragon Properties vs. Metro Retail Stores | DoubleDragon Properties vs. Philex Mining Corp | DoubleDragon Properties vs. BDO Unibank | DoubleDragon Properties vs. Security Bank Corp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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