Correlation Between GM and Invercap
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By analyzing existing cross correlation between General Motors and Invercap, you can compare the effects of market volatilities on GM and Invercap 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 Invercap. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Invercap.
Diversification Opportunities for GM and Invercap
Excellent diversification
The 3 months correlation between GM and Invercap is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Invercap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invercap 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 Invercap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invercap has no effect on the direction of GM i.e., GM and Invercap go up and down completely randomly.
Pair Corralation between GM and Invercap
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.16 times more return on investment than Invercap. However, GM is 2.16 times more volatile than Invercap. It trades about 0.04 of its potential returns per unit of risk. Invercap is currently generating about -0.17 per unit of risk. If you would invest 4,749 in General Motors on September 19, 2024 and sell it today you would earn a total of 416.50 from holding General Motors or generate 8.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
General Motors vs. Invercap
Performance |
| Timeline |
| General Motors |
| Invercap |
GM and Invercap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Invercap
The main advantage of trading using opposite GM and Invercap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Invercap 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 Invercap will offset losses from the drop in Invercap's long position.The idea behind General Motors and Invercap 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.| Invercap vs. Aguas Andinas SA | Invercap vs. Parq Arauco | Invercap vs. Enel Generacin Chile | Invercap vs. Sociedad Matriz SAAM |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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