Correlation Between GM and Emerald Banking
Can any of the company-specific risk be diversified away by investing in both GM and Emerald Banking 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 Emerald Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Emerald Banking And, you can compare the effects of market volatilities on GM and Emerald Banking 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 Emerald Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Emerald Banking.
Diversification Opportunities for GM and Emerald Banking
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GM and EMERALD is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Emerald Banking And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Banking And 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 Emerald Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Banking And has no effect on the direction of GM i.e., GM and Emerald Banking go up and down completely randomly.
Pair Corralation between GM and Emerald Banking
Allowing for the 90-day total investment horizon GM is expected to generate 1.26 times less return on investment than Emerald Banking. In addition to that, GM is 1.08 times more volatile than Emerald Banking And. It trades about 0.17 of its total potential returns per unit of risk. Emerald Banking And is currently generating about 0.23 per unit of volatility. If you would invest 2,183 in Emerald Banking And on September 1, 2024 and sell it today you would earn a total of 288.00 from holding Emerald Banking And or generate 13.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Emerald Banking And
Performance |
| Timeline |
| General Motors |
| Emerald Banking And |
GM and Emerald Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Emerald Banking
The main advantage of trading using opposite GM and Emerald Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Emerald Banking 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 Emerald Banking will offset losses from the drop in Emerald Banking's long position.The idea behind General Motors and Emerald Banking And 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.| Emerald Banking vs. Emerald Banking And | Emerald Banking vs. Emerald Banking And | Emerald Banking vs. Emerald Banking And | Emerald Banking vs. Rmb Mendon Financial |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |