Correlation Between GM and Indivior PLC
Can any of the company-specific risk be diversified away by investing in both GM and Indivior PLC 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 Indivior PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Indivior PLC, you can compare the effects of market volatilities on GM and Indivior PLC 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 Indivior PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Indivior PLC.
Diversification Opportunities for GM and Indivior PLC
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Indivior is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Indivior PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indivior PLC 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 Indivior PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indivior PLC has no effect on the direction of GM i.e., GM and Indivior PLC go up and down completely randomly.
Pair Corralation between GM and Indivior PLC
Allowing for the 90-day total investment horizon GM is expected to generate 1.71 times less return on investment than Indivior PLC. But when comparing it to its historical volatility, General Motors is 1.53 times less risky than Indivior PLC. It trades about 0.1 of its potential returns per unit of risk. Indivior PLC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 72,650 in Indivior PLC on September 12, 2024 and sell it today you would earn a total of 18,150 from holding Indivior PLC or generate 24.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
General Motors vs. Indivior PLC
Performance |
| Timeline |
| General Motors |
| Indivior PLC |
GM and Indivior PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Indivior PLC
The main advantage of trading using opposite GM and Indivior PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Indivior PLC 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 Indivior PLC will offset losses from the drop in Indivior PLC's long position.The idea behind General Motors and Indivior PLC 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.| Indivior PLC vs. McEwen Mining | Indivior PLC vs. Jacquet Metal Service | Indivior PLC vs. Automatic Data Processing | Indivior PLC vs. AMG Advanced Metallurgical |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Commodity Directory Find actively traded commodities issued by global exchanges |