Correlation Between GM and MeVis Medical
Can any of the company-specific risk be diversified away by investing in both GM and MeVis Medical 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 MeVis Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and MeVis Medical Solutions, you can compare the effects of market volatilities on GM and MeVis Medical 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 MeVis Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and MeVis Medical.
Diversification Opportunities for GM and MeVis Medical
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and MeVis is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and MeVis Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MeVis Medical Solutions 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 MeVis Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MeVis Medical Solutions has no effect on the direction of GM i.e., GM and MeVis Medical go up and down completely randomly.
Pair Corralation between GM and MeVis Medical
Allowing for the 90-day total investment horizon GM is expected to generate 1.2 times less return on investment than MeVis Medical. In addition to that, GM is 2.92 times more volatile than MeVis Medical Solutions. It trades about 0.07 of its total potential returns per unit of risk. MeVis Medical Solutions is currently generating about 0.25 per unit of volatility. If you would invest 2,400 in MeVis Medical Solutions on October 24, 2024 and sell it today you would earn a total of 80.00 from holding MeVis Medical Solutions or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
General Motors vs. MeVis Medical Solutions
Performance |
| Timeline |
| General Motors |
| MeVis Medical Solutions |
GM and MeVis Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and MeVis Medical
The main advantage of trading using opposite GM and MeVis Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, MeVis Medical 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 MeVis Medical will offset losses from the drop in MeVis Medical's long position.The idea behind General Motors and MeVis Medical Solutions 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.| MeVis Medical vs. GRIFFIN MINING LTD | MeVis Medical vs. SPORT LISBOA E | MeVis Medical vs. USWE SPORTS AB | MeVis Medical vs. Harmony Gold Mining |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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