Correlation Between GM and LIFE TIME
Can any of the company-specific risk be diversified away by investing in both GM and LIFE TIME 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 LIFE TIME into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and LIFE TIME FITNESS, you can compare the effects of market volatilities on GM and LIFE TIME 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 LIFE TIME. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and LIFE TIME.
Diversification Opportunities for GM and LIFE TIME
Pay attention - limited upside
The 3 months correlation between GM and LIFE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and LIFE TIME FITNESS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFE TIME FITNESS 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 LIFE TIME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFE TIME FITNESS has no effect on the direction of GM i.e., GM and LIFE TIME go up and down completely randomly.
Pair Corralation between GM and LIFE TIME
If you would invest 5,180 in General Motors on September 5, 2024 and sell it today you would earn a total of 156.00 from holding General Motors or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
General Motors vs. LIFE TIME FITNESS
Performance |
| Timeline |
| General Motors |
| LIFE TIME FITNESS |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and LIFE TIME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and LIFE TIME
The main advantage of trading using opposite GM and LIFE TIME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, LIFE TIME 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 LIFE TIME will offset losses from the drop in LIFE TIME's long position.The idea behind General Motors and LIFE TIME FITNESS 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.| LIFE TIME vs. Japan Asia Investment | LIFE TIME vs. DiamondRock Hospitality | LIFE TIME vs. WisdomTree Investments | LIFE TIME vs. CDL INVESTMENT |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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