Correlation Between GM and GainClients
Can any of the company-specific risk be diversified away by investing in both GM and GainClients 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 GainClients into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and GainClients, you can compare the effects of market volatilities on GM and GainClients 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 GainClients. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and GainClients.
Diversification Opportunities for GM and GainClients
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and GainClients is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and GainClients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GainClients 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 GainClients. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GainClients has no effect on the direction of GM i.e., GM and GainClients go up and down completely randomly.
Pair Corralation between GM and GainClients
Allowing for the 90-day total investment horizon GM is expected to generate 33.05 times less return on investment than GainClients. But when comparing it to its historical volatility, General Motors is 31.53 times less risky than GainClients. It trades about 0.05 of its potential returns per unit of risk. GainClients is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.20 in GainClients on November 5, 2024 and sell it today you would lose (0.19) from holding GainClients or give up 95.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
General Motors vs. GainClients
Performance |
| Timeline |
| General Motors |
| GainClients |
GM and GainClients Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and GainClients
The main advantage of trading using opposite GM and GainClients positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, GainClients 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 GainClients will offset losses from the drop in GainClients' long position.The idea behind General Motors and GainClients 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.| GainClients vs. Dave Warrants | GainClients vs. Business Warrior | GainClients vs. Fernhill Corp | GainClients vs. Bowmo Inc |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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