Correlation Between GM and Ferrovial
Can any of the company-specific risk be diversified away by investing in both GM and Ferrovial 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 Ferrovial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Ferrovial SA, you can compare the effects of market volatilities on GM and Ferrovial 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 Ferrovial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Ferrovial.
Diversification Opportunities for GM and Ferrovial
Very good diversification
The 3 months correlation between GM and Ferrovial is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Ferrovial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrovial SA 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 Ferrovial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrovial SA has no effect on the direction of GM i.e., GM and Ferrovial go up and down completely randomly.
Pair Corralation between GM and Ferrovial
Allowing for the 90-day total investment horizon GM is expected to generate 1.05 times less return on investment than Ferrovial. But when comparing it to its historical volatility, General Motors is 1.09 times less risky than Ferrovial. It trades about 0.07 of its potential returns per unit of risk. Ferrovial SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,622 in Ferrovial SA on August 26, 2024 and sell it today you would earn a total of 453.00 from holding Ferrovial SA or generate 17.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 28.93% |
| Values | Daily Returns |
General Motors vs. Ferrovial SA
Performance |
| Timeline |
| General Motors |
| Ferrovial SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Ferrovial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Ferrovial
The main advantage of trading using opposite GM and Ferrovial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Ferrovial 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 Ferrovial will offset losses from the drop in Ferrovial's long position.The idea behind General Motors and Ferrovial SA 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.| Ferrovial vs. Vinci SA ADR | Ferrovial vs. Geberit AG ADR | Ferrovial vs. Kone Oyj ADR | Ferrovial vs. Kuehne Nagel International |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |