Correlation Between GM and Electric Car
Can any of the company-specific risk be diversified away by investing in both GM and Electric Car 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 Electric Car into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Electric Car, you can compare the effects of market volatilities on GM and Electric Car 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 Electric Car. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Electric Car.
Diversification Opportunities for GM and Electric Car
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Electric is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Electric Car in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electric Car 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 Electric Car. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electric Car has no effect on the direction of GM i.e., GM and Electric Car go up and down completely randomly.
Pair Corralation between GM and Electric Car
If you would invest 0.01 in Electric Car on November 9, 2024 and sell it today you would earn a total of 0.00 from holding Electric Car or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Electric Car
Performance |
| Timeline |
| General Motors |
| Electric Car |
GM and Electric Car Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Electric Car
The main advantage of trading using opposite GM and Electric Car positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Electric Car 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 Electric Car will offset losses from the drop in Electric Car's long position.The idea behind General Motors and Electric Car 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.| Electric Car vs. Faraday Future Intelligent | Electric Car vs. Canoo Inc | Electric Car vs. Mullen Automotive | Electric Car vs. Hyzon Motors |
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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