Correlation Between GM and Multi Units
Can any of the company-specific risk be diversified away by investing in both GM and Multi Units 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 Multi Units into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Multi Units France, you can compare the effects of market volatilities on GM and Multi Units 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 Multi Units. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Multi Units.
Diversification Opportunities for GM and Multi Units
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Multi is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Multi Units France in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Units France 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 Multi Units. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Units France has no effect on the direction of GM i.e., GM and Multi Units go up and down completely randomly.
Pair Corralation between GM and Multi Units
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Multi Units. In addition to that, GM is 2.43 times more volatile than Multi Units France. It trades about -0.21 of its total potential returns per unit of risk. Multi Units France is currently generating about 0.24 per unit of volatility. If you would invest 163.00 in Multi Units France on November 22, 2024 and sell it today you would earn a total of 9.00 from holding Multi Units France or generate 5.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
General Motors vs. Multi Units France
Performance |
| Timeline |
| General Motors |
| Multi Units France |
GM and Multi Units Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Multi Units
The main advantage of trading using opposite GM and Multi Units positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Multi Units 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 Multi Units will offset losses from the drop in Multi Units' long position.The idea behind General Motors and Multi Units France 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.| Multi Units vs. Lyxor UCITS Stoxx | Multi Units vs. Multi Units France | Multi Units vs. Lyxor MSCI Brazil | Multi Units vs. MULTI UNITS LUXEMBOURG |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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