Correlation Between GM and Kngt Clb
Can any of the company-specific risk be diversified away by investing in both GM and Kngt Clb 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 Kngt Clb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Kngt Clb Larg, you can compare the effects of market volatilities on GM and Kngt Clb 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 Kngt Clb. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Kngt Clb.
Diversification Opportunities for GM and Kngt Clb
Poor diversification
The 3 months correlation between GM and Kngt is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Kngt Clb Larg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kngt Clb Larg 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 Kngt Clb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kngt Clb Larg has no effect on the direction of GM i.e., GM and Kngt Clb go up and down completely randomly.
Pair Corralation between GM and Kngt Clb
Allowing for the 90-day total investment horizon GM is expected to generate 1.12 times less return on investment than Kngt Clb. In addition to that, GM is 2.19 times more volatile than Kngt Clb Larg. It trades about 0.05 of its total potential returns per unit of risk. Kngt Clb Larg is currently generating about 0.12 per unit of volatility. If you would invest 1,260 in Kngt Clb Larg on September 3, 2024 and sell it today you would earn a total of 869.00 from holding Kngt Clb Larg or generate 68.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Kngt Clb Larg
Performance |
| Timeline |
| General Motors |
| Kngt Clb Larg |
GM and Kngt Clb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Kngt Clb
The main advantage of trading using opposite GM and Kngt Clb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Kngt Clb 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 Kngt Clb will offset losses from the drop in Kngt Clb's long position.The idea behind General Motors and Kngt Clb Larg 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.| Kngt Clb vs. Ultra Short Fixed Income | Kngt Clb vs. Balanced Fund Retail | Kngt Clb vs. Multimedia Portfolio Multimedia | Kngt Clb vs. Cutler Equity |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |