Correlation Between GM and LG Clean
Can any of the company-specific risk be diversified away by investing in both GM and LG Clean 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 LG Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and LG Clean Water, you can compare the effects of market volatilities on GM and LG Clean 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 LG Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and LG Clean.
Diversification Opportunities for GM and LG Clean
Very weak diversification
The 3 months correlation between GM and GLUG is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and LG Clean Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Clean Water 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 LG Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Clean Water has no effect on the direction of GM i.e., GM and LG Clean go up and down completely randomly.
Pair Corralation between GM and LG Clean
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.12 times more return on investment than LG Clean. However, GM is 2.12 times more volatile than LG Clean Water. It trades about 0.05 of its potential returns per unit of risk. LG Clean Water is currently generating about 0.05 per unit of risk. If you would invest 3,765 in General Motors on September 4, 2024 and sell it today you would earn a total of 1,739 from holding General Motors or generate 46.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
General Motors vs. LG Clean Water
Performance |
| Timeline |
| General Motors |
| LG Clean Water |
GM and LG Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and LG Clean
The main advantage of trading using opposite GM and LG Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, LG Clean 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 LG Clean will offset losses from the drop in LG Clean's long position.The idea behind General Motors and LG Clean Water 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.| LG Clean vs. Vanguard FTSE Emerging | LG Clean vs. UBS ETF MSCI | LG Clean vs. VanEck Solana ETN | LG Clean vs. iShares Corp Bond |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |