Correlation Between GM and Maui Land
Can any of the company-specific risk be diversified away by investing in both GM and Maui Land 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 Maui Land into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Maui Land Pineapple, you can compare the effects of market volatilities on GM and Maui Land 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 Maui Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Maui Land.
Diversification Opportunities for GM and Maui Land
Significant diversification
The 3 months correlation between GM and Maui is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Maui Land Pineapple in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maui Land Pineapple 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 Maui Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maui Land Pineapple has no effect on the direction of GM i.e., GM and Maui Land go up and down completely randomly.
Pair Corralation between GM and Maui Land
Allowing for the 90-day total investment horizon GM is expected to generate 2.2 times less return on investment than Maui Land. But when comparing it to its historical volatility, General Motors is 2.26 times less risky than Maui Land. It trades about 0.14 of its potential returns per unit of risk. Maui Land Pineapple is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,141 in Maui Land Pineapple on August 24, 2024 and sell it today you would earn a total of 234.00 from holding Maui Land Pineapple or generate 10.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Maui Land Pineapple
Performance |
| Timeline |
| General Motors |
| Maui Land Pineapple |
GM and Maui Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Maui Land
The main advantage of trading using opposite GM and Maui Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Maui Land 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 Maui Land will offset losses from the drop in Maui Land's long position.The idea behind General Motors and Maui Land Pineapple 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.| Maui Land vs. New England Realty | Maui Land vs. Marcus Millichap | Maui Land vs. J W Mays | Maui Land vs. FirstService Corp |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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