Correlation Between GM and Firefly AB
Can any of the company-specific risk be diversified away by investing in both GM and Firefly AB 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 Firefly AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Firefly AB, you can compare the effects of market volatilities on GM and Firefly AB 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 Firefly AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Firefly AB.
Diversification Opportunities for GM and Firefly AB
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GM and Firefly is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Firefly AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firefly AB 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 Firefly AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firefly AB has no effect on the direction of GM i.e., GM and Firefly AB go up and down completely randomly.
Pair Corralation between GM and Firefly AB
Allowing for the 90-day total investment horizon GM is expected to generate 2.34 times less return on investment than Firefly AB. But when comparing it to its historical volatility, General Motors is 1.27 times less risky than Firefly AB. It trades about 0.04 of its potential returns per unit of risk. Firefly AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 8,578 in Firefly AB on October 23, 2024 and sell it today you would earn a total of 9,222 from holding Firefly AB or generate 107.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
General Motors vs. Firefly AB
Performance |
| Timeline |
| General Motors |
| Firefly AB |
GM and Firefly AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Firefly AB
The main advantage of trading using opposite GM and Firefly AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Firefly AB 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 Firefly AB will offset losses from the drop in Firefly AB's long position.The idea behind General Motors and Firefly AB 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.| Firefly AB vs. MTI Investment SE | Firefly AB vs. USWE Sports AB | Firefly AB vs. Media and Games | Firefly AB vs. Filo Mining Corp |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |