Correlation Between GM and Helmerich Payne
Can any of the company-specific risk be diversified away by investing in both GM and Helmerich Payne 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 Helmerich Payne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Helmerich Payne, you can compare the effects of market volatilities on GM and Helmerich Payne 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 Helmerich Payne. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Helmerich Payne.
Diversification Opportunities for GM and Helmerich Payne
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Helmerich is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Helmerich Payne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helmerich Payne 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 Helmerich Payne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helmerich Payne has no effect on the direction of GM i.e., GM and Helmerich Payne go up and down completely randomly.
Pair Corralation between GM and Helmerich Payne
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.04 times more return on investment than Helmerich Payne. However, GM is 1.04 times more volatile than Helmerich Payne. It trades about 0.17 of its potential returns per unit of risk. Helmerich Payne is currently generating about 0.12 per unit of risk. If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
General Motors vs. Helmerich Payne
Performance |
| Timeline |
| General Motors |
| Helmerich Payne |
GM and Helmerich Payne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Helmerich Payne
The main advantage of trading using opposite GM and Helmerich Payne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Helmerich Payne 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 Helmerich Payne will offset losses from the drop in Helmerich Payne's long position.The idea behind General Motors and Helmerich Payne 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.| Helmerich Payne vs. ARDAGH METAL PACDL 0001 | Helmerich Payne vs. DAIRY FARM INTL | Helmerich Payne vs. PARKEN Sport Entertainment | Helmerich Payne vs. Granite Construction |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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