Correlation Between GM and Engie Energia
Can any of the company-specific risk be diversified away by investing in both GM and Engie Energia 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 Engie Energia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Engie Energia Chile, you can compare the effects of market volatilities on GM and Engie Energia 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 Engie Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Engie Energia.
Diversification Opportunities for GM and Engie Energia
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Engie is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Engie Energia Chile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie Energia Chile 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 Engie Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie Energia Chile has no effect on the direction of GM i.e., GM and Engie Energia go up and down completely randomly.
Pair Corralation between GM and Engie Energia
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Engie Energia. In addition to that, GM is 3.65 times more volatile than Engie Energia Chile. It trades about -0.06 of its total potential returns per unit of risk. Engie Energia Chile is currently generating about -0.18 per unit of volatility. If you would invest 101,500 in Engie Energia Chile on December 30, 2024 and sell it today you would lose (3,380) from holding Engie Energia Chile or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Engie Energia Chile
Performance |
| Timeline |
| General Motors |
| Engie Energia Chile |
GM and Engie Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Engie Energia
The main advantage of trading using opposite GM and Engie Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Engie Energia 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 Engie Energia will offset losses from the drop in Engie Energia's long position.The idea behind General Motors and Engie Energia Chile 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.| Engie Energia vs. Colbun | Engie Energia vs. Enel Chile SA | Engie Energia vs. CAP SA | Engie Energia vs. Enel Amricas SA |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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