Correlation Between GM and Global Payment
Can any of the company-specific risk be diversified away by investing in both GM and Global Payment 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 Global Payment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Global Payment Technologies, you can compare the effects of market volatilities on GM and Global Payment 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 Global Payment. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Global Payment.
Diversification Opportunities for GM and Global Payment
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Global is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Global Payment Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Payment Techn 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 Global Payment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Payment Techn has no effect on the direction of GM i.e., GM and Global Payment go up and down completely randomly.
Pair Corralation between GM and Global Payment
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 | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Global Payment Technologies
Performance |
| Timeline |
| General Motors |
| Global Payment Techn |
GM and Global Payment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Global Payment
The main advantage of trading using opposite GM and Global Payment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Global Payment 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 Global Payment will offset losses from the drop in Global Payment's long position.The idea behind General Motors and Global Payment Technologies 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.| Global Payment vs. NioCorp Developments Ltd | Global Payment vs. Barrick Gold Corp | Global Payment vs. Highway Holdings Limited | Global Payment vs. Perseus Mining Limited |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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