Correlation Between GM and Maritime Launch
Can any of the company-specific risk be diversified away by investing in both GM and Maritime Launch 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 Maritime Launch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Maritime Launch Services, you can compare the effects of market volatilities on GM and Maritime Launch 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 Maritime Launch. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Maritime Launch.
Diversification Opportunities for GM and Maritime Launch
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Maritime is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Maritime Launch Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maritime Launch Services 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 Maritime Launch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maritime Launch Services has no effect on the direction of GM i.e., GM and Maritime Launch go up and down completely randomly.
Pair Corralation between GM and Maritime Launch
Allowing for the 90-day total investment horizon GM is expected to generate 3.22 times less return on investment than Maritime Launch. But when comparing it to its historical volatility, General Motors is 3.56 times less risky than Maritime Launch. It trades about 0.12 of its potential returns per unit of risk. Maritime Launch Services is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3.50 in Maritime Launch Services on August 31, 2024 and sell it today you would earn a total of 0.50 from holding Maritime Launch Services or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Maritime Launch Services
Performance |
| Timeline |
| General Motors |
| Maritime Launch Services |
GM and Maritime Launch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Maritime Launch
The main advantage of trading using opposite GM and Maritime Launch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Maritime Launch 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 Maritime Launch will offset losses from the drop in Maritime Launch's long position.The idea behind General Motors and Maritime Launch Services 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.| Maritime Launch vs. Gfl Environmental Holdings | Maritime Launch vs. Renoworks Software | Maritime Launch vs. iSign Media Solutions | Maritime Launch vs. Stampede Drilling |
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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