Correlation Between GM and Esprinet SpA
Can any of the company-specific risk be diversified away by investing in both GM and Esprinet 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 Esprinet 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 Esprinet SpA, you can compare the effects of market volatilities on GM and Esprinet 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 Esprinet SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Esprinet SpA.
Diversification Opportunities for GM and Esprinet SpA
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Esprinet is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Esprinet SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esprinet 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 Esprinet SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esprinet SpA has no effect on the direction of GM i.e., GM and Esprinet SpA go up and down completely randomly.
Pair Corralation between GM and Esprinet SpA
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.18 times more return on investment than Esprinet SpA. However, GM is 1.18 times more volatile than Esprinet SpA. It trades about 0.03 of its potential returns per unit of risk. Esprinet SpA is currently generating about -0.28 per unit of risk. If you would invest 4,852 in General Motors on October 14, 2024 and sell it today you would earn a total of 133.00 from holding General Motors or generate 2.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.39% |
| Values | Daily Returns |
General Motors vs. Esprinet SpA
Performance |
| Timeline |
| General Motors |
| Esprinet SpA |
GM and Esprinet SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Esprinet SpA
The main advantage of trading using opposite GM and Esprinet SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Esprinet 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 Esprinet SpA will offset losses from the drop in Esprinet SpA's long position.The idea behind General Motors and Esprinet 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.| Esprinet SpA vs. AOYAMA TRADING | Esprinet SpA vs. New Residential Investment | Esprinet SpA vs. Japan Asia Investment | Esprinet SpA vs. Perdoceo Education |
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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