Correlation Between GM and Genco Shipping
Can any of the company-specific risk be diversified away by investing in both GM and Genco Shipping 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 Genco Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Genco Shipping Trading, you can compare the effects of market volatilities on GM and Genco Shipping 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 Genco Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Genco Shipping.
Diversification Opportunities for GM and Genco Shipping
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Genco is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Genco Shipping Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genco Shipping Trading 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 Genco Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genco Shipping Trading has no effect on the direction of GM i.e., GM and Genco Shipping go up and down completely randomly.
Pair Corralation between GM and Genco Shipping
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.43 times more return on investment than Genco Shipping. However, GM is 1.43 times more volatile than Genco Shipping Trading. It trades about 0.12 of its potential returns per unit of risk. Genco Shipping Trading is currently generating about 0.12 per unit of risk. If you would invest 5,197 in General Motors on August 31, 2024 and sell it today you would earn a total of 353.00 from holding General Motors or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Genco Shipping Trading
Performance |
| Timeline |
| General Motors |
| Genco Shipping Trading |
GM and Genco Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Genco Shipping
The main advantage of trading using opposite GM and Genco Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Genco Shipping 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 Genco Shipping will offset losses from the drop in Genco Shipping's long position.The idea behind General Motors and Genco Shipping Trading 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.| Genco Shipping vs. Star Bulk Carriers | Genco Shipping vs. Golden Ocean Group | Genco Shipping vs. Global Ship Lease | Genco Shipping vs. Danaos |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |