Correlation Between GM and UNIDOC HEALTH
Can any of the company-specific risk be diversified away by investing in both GM and UNIDOC HEALTH 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 UNIDOC HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and UNIDOC HEALTH P, you can compare the effects of market volatilities on GM and UNIDOC HEALTH 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 UNIDOC HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and UNIDOC HEALTH.
Diversification Opportunities for GM and UNIDOC HEALTH
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and UNIDOC is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and UNIDOC HEALTH P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIDOC HEALTH P 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 UNIDOC HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIDOC HEALTH P has no effect on the direction of GM i.e., GM and UNIDOC HEALTH go up and down completely randomly.
Pair Corralation between GM and UNIDOC HEALTH
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.68 times more return on investment than UNIDOC HEALTH. However, General Motors is 1.48 times less risky than UNIDOC HEALTH. It trades about -0.18 of its potential returns per unit of risk. UNIDOC HEALTH P is currently generating about -0.15 per unit of risk. If you would invest 5,353 in General Motors on November 5, 2024 and sell it today you would lose (563.00) from holding General Motors or give up 10.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
General Motors vs. UNIDOC HEALTH P
Performance |
| Timeline |
| General Motors |
| UNIDOC HEALTH P |
GM and UNIDOC HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and UNIDOC HEALTH
The main advantage of trading using opposite GM and UNIDOC HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, UNIDOC HEALTH 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 UNIDOC HEALTH will offset losses from the drop in UNIDOC HEALTH's long position.The idea behind General Motors and UNIDOC HEALTH P 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.| UNIDOC HEALTH vs. Veeva Systems | UNIDOC HEALTH vs. 10X GENOMICS DL | UNIDOC HEALTH vs. Evolent Health | UNIDOC HEALTH vs. COMPUGROUP MEDSPADR 1 |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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