Correlation Between GM and Datalogic SpA
Can any of the company-specific risk be diversified away by investing in both GM and Datalogic SpA 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 Datalogic SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Datalogic SpA, you can compare the effects of market volatilities on GM and Datalogic SpA 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 Datalogic SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Datalogic SpA.
Diversification Opportunities for GM and Datalogic SpA
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and Datalogic is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Datalogic SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datalogic SpA 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 Datalogic SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datalogic SpA has no effect on the direction of GM i.e., GM and Datalogic SpA go up and down completely randomly.
Pair Corralation between GM and Datalogic SpA
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.08 times more return on investment than Datalogic SpA. However, GM is 1.08 times more volatile than Datalogic SpA. It trades about -0.07 of its potential returns per unit of risk. Datalogic SpA is currently generating about -0.12 per unit of risk. If you would invest 5,527 in General Motors on November 7, 2024 and sell it today you would lose (670.00) from holding General Motors or give up 12.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Datalogic SpA
Performance |
| Timeline |
| General Motors |
| Datalogic SpA |
GM and Datalogic SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Datalogic SpA
The main advantage of trading using opposite GM and Datalogic SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Datalogic SpA 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 Datalogic SpA will offset losses from the drop in Datalogic SpA's long position.The idea behind General Motors and Datalogic SpA 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.| Datalogic SpA vs. The Home Depot | Datalogic SpA vs. T MOBILE INCDL 00001 | Datalogic SpA vs. Mobilezone Holding AG | Datalogic SpA vs. Chengdu PUTIAN Telecommunications |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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