Correlation Between GM and Huron Consulting
Can any of the company-specific risk be diversified away by investing in both GM and Huron Consulting 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 Huron Consulting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Huron Consulting Group, you can compare the effects of market volatilities on GM and Huron Consulting 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 Huron Consulting. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Huron Consulting.
Diversification Opportunities for GM and Huron Consulting
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Huron is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Huron Consulting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huron Consulting 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 Huron Consulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huron Consulting has no effect on the direction of GM i.e., GM and Huron Consulting go up and down completely randomly.
Pair Corralation between GM and Huron Consulting
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Huron Consulting. In addition to that, GM is 1.67 times more volatile than Huron Consulting Group. It trades about -0.09 of its total potential returns per unit of risk. Huron Consulting Group is currently generating about 0.03 per unit of volatility. If you would invest 12,568 in Huron Consulting Group on November 9, 2024 and sell it today you would earn a total of 89.00 from holding Huron Consulting Group or generate 0.71% 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. Huron Consulting Group
Performance |
| Timeline |
| General Motors |
| Huron Consulting |
GM and Huron Consulting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Huron Consulting
The main advantage of trading using opposite GM and Huron Consulting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Huron Consulting 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 Huron Consulting will offset losses from the drop in Huron Consulting's long position.The idea behind General Motors and Huron Consulting Group 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.| Huron Consulting vs. ICF International | Huron Consulting vs. CRA International | Huron Consulting vs. FTI Consulting | Huron Consulting vs. Heidrick Struggles International |
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 Stocks Directory module to find actively traded stocks across global markets.
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