Correlation Between GM and Isuzu Motors
Can any of the company-specific risk be diversified away by investing in both GM and Isuzu Motors 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 Isuzu Motors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Isuzu Motors Limited, you can compare the effects of market volatilities on GM and Isuzu Motors 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 Isuzu Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Isuzu Motors.
Diversification Opportunities for GM and Isuzu Motors
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Isuzu is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Isuzu Motors Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isuzu Motors Limited 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 Isuzu Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isuzu Motors Limited has no effect on the direction of GM i.e., GM and Isuzu Motors go up and down completely randomly.
Pair Corralation between GM and Isuzu Motors
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.48 times more return on investment than Isuzu Motors. However, General Motors is 2.08 times less risky than Isuzu Motors. It trades about 0.07 of its potential returns per unit of risk. Isuzu Motors Limited is currently generating about 0.03 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 | Moves Against |
| Strength | Weak |
| Accuracy | 57.53% |
| Values | Daily Returns |
General Motors vs. Isuzu Motors Limited
Performance |
| Timeline |
| General Motors |
| Isuzu Motors Limited |
GM and Isuzu Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Isuzu Motors
The main advantage of trading using opposite GM and Isuzu Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Isuzu Motors 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 Isuzu Motors will offset losses from the drop in Isuzu Motors' long position.The idea behind General Motors and Isuzu Motors Limited 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.| Isuzu Motors vs. General Motors | Isuzu Motors vs. Tesla Inc | Isuzu Motors vs. Rivian Automotive | Isuzu Motors vs. Nio Class A |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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