Correlation Between GM and Dice Sport
Can any of the company-specific risk be diversified away by investing in both GM and Dice Sport 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 Dice Sport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Dice Sport Casual, you can compare the effects of market volatilities on GM and Dice Sport 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 Dice Sport. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Dice Sport.
Diversification Opportunities for GM and Dice Sport
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Dice is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Dice Sport Casual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dice Sport Casual 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 Dice Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dice Sport Casual has no effect on the direction of GM i.e., GM and Dice Sport go up and down completely randomly.
Pair Corralation between GM and Dice Sport
Allowing for the 90-day total investment horizon GM is expected to generate 3.41 times less return on investment than Dice Sport. But when comparing it to its historical volatility, General Motors is 1.81 times less risky than Dice Sport. It trades about 0.07 of its potential returns per unit of risk. Dice Sport Casual is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 51.00 in Dice Sport Casual on August 28, 2024 and sell it today you would earn a total of 161.00 from holding Dice Sport Casual or generate 315.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.31% |
| Values | Daily Returns |
General Motors vs. Dice Sport Casual
Performance |
| Timeline |
| General Motors |
| Dice Sport Casual |
GM and Dice Sport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Dice Sport
The main advantage of trading using opposite GM and Dice Sport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Dice Sport 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 Dice Sport will offset losses from the drop in Dice Sport's long position.The idea behind General Motors and Dice Sport Casual 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.| Dice Sport vs. Sharkia National Food | Dice Sport vs. Industrial Engineering Projects | Dice Sport vs. Misr National Steel | Dice Sport vs. Gadwa For Industrial |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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