Correlation Between GM and SENERELECSPGDR REGS
Can any of the company-specific risk be diversified away by investing in both GM and SENERELECSPGDR REGS 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 SENERELECSPGDR REGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and SENERELECSPGDR REGS 1, you can compare the effects of market volatilities on GM and SENERELECSPGDR REGS 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 SENERELECSPGDR REGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and SENERELECSPGDR REGS.
Diversification Opportunities for GM and SENERELECSPGDR REGS
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and SENERELECSPGDR is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and SENERELECSPGDR REGS 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SENERELECSPGDR REGS 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 SENERELECSPGDR REGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SENERELECSPGDR REGS has no effect on the direction of GM i.e., GM and SENERELECSPGDR REGS go up and down completely randomly.
Pair Corralation between GM and SENERELECSPGDR REGS
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the SENERELECSPGDR REGS. In addition to that, GM is 1.17 times more volatile than SENERELECSPGDR REGS 1. It trades about -0.16 of its total potential returns per unit of risk. SENERELECSPGDR REGS 1 is currently generating about -0.08 per unit of volatility. If you would invest 1,150 in SENERELECSPGDR REGS 1 on September 14, 2024 and sell it today you would lose (50.00) from holding SENERELECSPGDR REGS 1 or give up 4.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. SENERELECSPGDR REGS 1
Performance |
| Timeline |
| General Motors |
| SENERELECSPGDR REGS |
GM and SENERELECSPGDR REGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and SENERELECSPGDR REGS
The main advantage of trading using opposite GM and SENERELECSPGDR REGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, SENERELECSPGDR REGS 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 SENERELECSPGDR REGS will offset losses from the drop in SENERELECSPGDR REGS's long position.The idea behind General Motors and SENERELECSPGDR REGS 1 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.| SENERELECSPGDR REGS vs. PLAY2CHILL SA ZY | SENERELECSPGDR REGS vs. Columbia Sportswear | SENERELECSPGDR REGS vs. USWE SPORTS AB | SENERELECSPGDR REGS vs. Playa Hotels Resorts |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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