Correlation Between GM and EcoRodovias Infraestrutura
Can any of the company-specific risk be diversified away by investing in both GM and EcoRodovias Infraestrutura 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 EcoRodovias Infraestrutura into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and EcoRodovias Infraestrutura e, you can compare the effects of market volatilities on GM and EcoRodovias Infraestrutura 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 EcoRodovias Infraestrutura. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and EcoRodovias Infraestrutura.
Diversification Opportunities for GM and EcoRodovias Infraestrutura
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and EcoRodovias is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and EcoRodovias Infraestrutura e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EcoRodovias Infraestrutura 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 EcoRodovias Infraestrutura. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EcoRodovias Infraestrutura has no effect on the direction of GM i.e., GM and EcoRodovias Infraestrutura go up and down completely randomly.
Pair Corralation between GM and EcoRodovias Infraestrutura
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.51 times more return on investment than EcoRodovias Infraestrutura. However, General Motors is 1.97 times less risky than EcoRodovias Infraestrutura. It trades about 0.12 of its potential returns per unit of risk. EcoRodovias Infraestrutura e is currently generating about -0.21 per unit of risk. If you would invest 5,197 in General Motors on August 31, 2024 and sell it today you would earn a total of 353.00 from holding General Motors or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
General Motors vs. EcoRodovias Infraestrutura e
Performance |
| Timeline |
| General Motors |
| EcoRodovias Infraestrutura |
GM and EcoRodovias Infraestrutura Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and EcoRodovias Infraestrutura
The main advantage of trading using opposite GM and EcoRodovias Infraestrutura positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, EcoRodovias Infraestrutura 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 EcoRodovias Infraestrutura will offset losses from the drop in EcoRodovias Infraestrutura's long position.The idea behind General Motors and EcoRodovias Infraestrutura e 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.| EcoRodovias Infraestrutura vs. CCR SA | EcoRodovias Infraestrutura vs. MRV Engenharia e | EcoRodovias Infraestrutura vs. Rumo SA | EcoRodovias Infraestrutura vs. Qualicorp Consultoria e |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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