Correlation Between GM and Fobi AI
Can any of the company-specific risk be diversified away by investing in both GM and Fobi AI 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 Fobi AI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Fobi AI, you can compare the effects of market volatilities on GM and Fobi AI 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 Fobi AI. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Fobi AI.
Diversification Opportunities for GM and Fobi AI
Modest diversification
The 3 months correlation between GM and Fobi is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Fobi AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fobi AI 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 Fobi AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fobi AI has no effect on the direction of GM i.e., GM and Fobi AI go up and down completely randomly.
Pair Corralation between GM and Fobi AI
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Fobi AI. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 22.56 times less risky than Fobi AI. The stock trades about -0.07 of its potential returns per unit of risk. The Fobi AI is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1.60 in Fobi AI on January 5, 2025 and sell it today you would earn a total of 0.61 from holding Fobi AI or generate 38.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 86.05% |
| Values | Daily Returns |
General Motors vs. Fobi AI
Performance |
| Timeline |
| General Motors |
| Fobi AI |
GM and Fobi AI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Fobi AI
The main advantage of trading using opposite GM and Fobi AI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Fobi AI 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 Fobi AI will offset losses from the drop in Fobi AI's long position.The idea behind General Motors and Fobi AI 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.| Fobi AI vs. Voxtur Analytics Corp | Fobi AI vs. Fobi AI | Fobi AI vs. ThreeD Capital | Fobi AI vs. VSBLTY Groupe Technologies |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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