Correlation Between GM and Granite GAFAM
Can any of the company-specific risk be diversified away by investing in both GM and Granite GAFAM 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 Granite GAFAM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Granite GAFAM, you can compare the effects of market volatilities on GM and Granite GAFAM 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 Granite GAFAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Granite GAFAM.
Diversification Opportunities for GM and Granite GAFAM
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Granite is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Granite GAFAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite GAFAM 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 Granite GAFAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite GAFAM has no effect on the direction of GM i.e., GM and Granite GAFAM go up and down completely randomly.
Pair Corralation between GM and Granite GAFAM
If you would invest (100.00) in Granite GAFAM on September 22, 2024 and sell it today you would earn a total of 100.00 from holding Granite GAFAM or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
General Motors vs. Granite GAFAM
Performance |
| Timeline |
| General Motors |
| Granite GAFAM |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Granite GAFAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Granite GAFAM
The main advantage of trading using opposite GM and Granite GAFAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Granite GAFAM 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 Granite GAFAM will offset losses from the drop in Granite GAFAM's long position.The idea behind General Motors and Granite GAFAM 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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