Correlation Between GM and Invex Therapeutics
Can any of the company-specific risk be diversified away by investing in both GM and Invex Therapeutics 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 Invex Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Invex Therapeutics, you can compare the effects of market volatilities on GM and Invex Therapeutics 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 Invex Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Invex Therapeutics.
Diversification Opportunities for GM and Invex Therapeutics
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GM and Invex is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Invex Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invex Therapeutics 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 Invex Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invex Therapeutics has no effect on the direction of GM i.e., GM and Invex Therapeutics go up and down completely randomly.
Pair Corralation between GM and Invex Therapeutics
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.71 times more return on investment than Invex Therapeutics. However, General Motors is 1.41 times less risky than Invex Therapeutics. It trades about -0.14 of its potential returns per unit of risk. Invex Therapeutics is currently generating about -0.27 per unit of risk. If you would invest 5,753 in General Motors on September 12, 2024 and sell it today you would lose (479.00) from holding General Motors or give up 8.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Invex Therapeutics
Performance |
| Timeline |
| General Motors |
| Invex Therapeutics |
GM and Invex Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Invex Therapeutics
The main advantage of trading using opposite GM and Invex Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Invex Therapeutics 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 Invex Therapeutics will offset losses from the drop in Invex Therapeutics' long position.The idea behind General Motors and Invex Therapeutics 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.| Invex Therapeutics vs. MetalsGrove Mining | Invex Therapeutics vs. Stelar Metals | Invex Therapeutics vs. Aurelia Metals | Invex Therapeutics vs. Dalaroo Metals |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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