Correlation Between GM and Finch Therapeutics
Can any of the company-specific risk be diversified away by investing in both GM and Finch Therapeutics 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 Finch Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Finch Therapeutics Group, you can compare the effects of market volatilities on GM and Finch Therapeutics 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 Finch Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Finch Therapeutics.
Diversification Opportunities for GM and Finch Therapeutics
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Finch is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Finch Therapeutics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finch Therapeutics 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 Finch Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finch Therapeutics has no effect on the direction of GM i.e., GM and Finch Therapeutics go up and down completely randomly.
Pair Corralation between GM and Finch Therapeutics
If you would invest 4,476 in General Motors on August 29, 2024 and sell it today you would earn a total of 1,074 from holding General Motors or generate 23.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.79% |
| Values | Daily Returns |
General Motors vs. Finch Therapeutics Group
Performance |
| Timeline |
| General Motors |
| Finch Therapeutics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Finch Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Finch Therapeutics
The main advantage of trading using opposite GM and Finch Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Finch Therapeutics 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 Finch Therapeutics will offset losses from the drop in Finch Therapeutics' long position.The idea behind General Motors and Finch Therapeutics Group 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.| Finch Therapeutics vs. Werewolf Therapeutics | Finch Therapeutics vs. Edgewise Therapeutics | Finch Therapeutics vs. Celcuity LLC | Finch Therapeutics vs. C4 Therapeutics |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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