Correlation Between GM and Innoviva
Can any of the company-specific risk be diversified away by investing in both GM and Innoviva 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 Innoviva into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Innoviva, you can compare the effects of market volatilities on GM and Innoviva 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 Innoviva. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Innoviva.
Diversification Opportunities for GM and Innoviva
Pay attention - limited upside
The 3 months correlation between GM and Innoviva is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Innoviva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innoviva 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 Innoviva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innoviva has no effect on the direction of GM i.e., GM and Innoviva go up and down completely randomly.
Pair Corralation between GM and Innoviva
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.54 times more return on investment than Innoviva. However, GM is 1.54 times more volatile than Innoviva. It trades about 0.07 of its potential returns per unit of risk. Innoviva is currently generating about 0.08 per unit of risk. If you would invest 3,617 in General Motors on September 2, 2024 and sell it today you would earn a total of 1,942 from holding General Motors or generate 53.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Innoviva
Performance |
| Timeline |
| General Motors |
| Innoviva |
GM and Innoviva Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Innoviva
The main advantage of trading using opposite GM and Innoviva positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Innoviva 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 Innoviva will offset losses from the drop in Innoviva's long position.The idea behind General Motors and Innoviva 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.| Innoviva vs. Protalix Biotherapeutics | Innoviva vs. PDS Biotechnology Corp | Innoviva vs. Elevation Oncology | Innoviva vs. Day One Biopharmaceuticals |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| 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 | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |