Correlation Between GM and IXICO PLC
Can any of the company-specific risk be diversified away by investing in both GM and IXICO 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 IXICO 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 IXICO PLC, you can compare the effects of market volatilities on GM and IXICO 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 IXICO PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and IXICO PLC.
Diversification Opportunities for GM and IXICO PLC
Very weak diversification
The 3 months correlation between GM and IXICO is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and IXICO PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IXICO 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 IXICO PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IXICO PLC has no effect on the direction of GM i.e., GM and IXICO PLC go up and down completely randomly.
Pair Corralation between GM and IXICO PLC
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the IXICO PLC. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 1.64 times less risky than IXICO PLC. The stock trades about -0.19 of its potential returns per unit of risk. The IXICO PLC is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,000.00 in IXICO PLC on September 19, 2024 and sell it today you would earn a total of 175.00 from holding IXICO PLC or generate 17.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
General Motors vs. IXICO PLC
Performance |
| Timeline |
| General Motors |
| IXICO PLC |
GM and IXICO PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and IXICO PLC
The main advantage of trading using opposite GM and IXICO PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, IXICO 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 IXICO PLC will offset losses from the drop in IXICO PLC's long position.The idea behind General Motors and IXICO 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.| IXICO PLC vs. Neometals | IXICO PLC vs. Scandic Hotels Group | IXICO PLC vs. Endeavour Mining Corp | IXICO PLC vs. Ross Stores |
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 Positions Ratings module to 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.
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