Correlation Between GM and Marblegate Acquisition
Can any of the company-specific risk be diversified away by investing in both GM and Marblegate Acquisition 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 Marblegate Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Marblegate Acquisition Corp, you can compare the effects of market volatilities on GM and Marblegate Acquisition 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 Marblegate Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Marblegate Acquisition.
Diversification Opportunities for GM and Marblegate Acquisition
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Marblegate is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Marblegate Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marblegate Acquisition 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 Marblegate Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marblegate Acquisition has no effect on the direction of GM i.e., GM and Marblegate Acquisition go up and down completely randomly.
Pair Corralation between GM and Marblegate Acquisition
Allowing for the 90-day total investment horizon GM is expected to generate 17.12 times less return on investment than Marblegate Acquisition. But when comparing it to its historical volatility, General Motors is 10.8 times less risky than Marblegate Acquisition. It trades about 0.05 of its potential returns per unit of risk. Marblegate Acquisition Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Marblegate Acquisition Corp on August 26, 2024 and sell it today you would lose (1.80) from holding Marblegate Acquisition Corp or give up 36.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Marblegate Acquisition Corp
Performance |
| Timeline |
| General Motors |
| Marblegate Acquisition |
GM and Marblegate Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Marblegate Acquisition
The main advantage of trading using opposite GM and Marblegate Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Marblegate Acquisition 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 Marblegate Acquisition will offset losses from the drop in Marblegate Acquisition's long position.The idea behind General Motors and Marblegate Acquisition Corp 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.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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