Correlation Between GM and Logility
Can any of the company-specific risk be diversified away by investing in both GM and Logility 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 Logility into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Logility, you can compare the effects of market volatilities on GM and Logility 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 Logility. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Logility.
Diversification Opportunities for GM and Logility
Modest diversification
The 3 months correlation between GM and Logility is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Logility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logility 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 Logility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logility has no effect on the direction of GM i.e., GM and Logility go up and down completely randomly.
Pair Corralation between GM and Logility
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.91 times more return on investment than Logility. However, General Motors is 1.1 times less risky than Logility. It trades about 0.05 of its potential returns per unit of risk. Logility is currently generating about -0.01 per unit of risk. If you would invest 3,778 in General Motors on September 2, 2024 and sell it today you would earn a total of 1,781 from holding General Motors or generate 47.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Logility
Performance |
| Timeline |
| General Motors |
| Logility |
GM and Logility Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Logility
The main advantage of trading using opposite GM and Logility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Logility 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 Logility will offset losses from the drop in Logility's long position.The idea behind General Motors and Logility 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.| Logility vs. Corporacion America Airports | Logility vs. EvoAir Holdings | Logility vs. Summit Hotel Properties | Logility vs. Alvarium Tiedemann Holdings |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |