Correlation Between GM and Mason Industrial
Can any of the company-specific risk be diversified away by investing in both GM and Mason Industrial 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 Mason Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Mason Industrial Technology, you can compare the effects of market volatilities on GM and Mason Industrial 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 Mason Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Mason Industrial.
Diversification Opportunities for GM and Mason Industrial
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GM and Mason is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Mason Industrial Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mason Industrial Tec 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 Mason Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mason Industrial Tec has no effect on the direction of GM i.e., GM and Mason Industrial go up and down completely randomly.
Pair Corralation between GM and Mason Industrial
If you would invest 3,227 in General Motors on September 3, 2024 and sell it today you would earn a total of 2,277 from holding General Motors or generate 70.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 0.32% |
| Values | Daily Returns |
General Motors vs. Mason Industrial Technology
Performance |
| Timeline |
| General Motors |
| Mason Industrial Tec |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Mason Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Mason Industrial
The main advantage of trading using opposite GM and Mason Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Mason Industrial 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 Mason Industrial will offset losses from the drop in Mason Industrial's long position.The idea behind General Motors and Mason Industrial Technology 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.| Mason Industrial vs. Meli Hotels International | Mason Industrial vs. The Hanover Insurance | Mason Industrial vs. The Cheesecake Factory | Mason Industrial vs. The Wendys Co |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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