Correlation Between GM and MPC Container
Can any of the company-specific risk be diversified away by investing in both GM and MPC Container 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 MPC Container into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and MPC Container Ships, you can compare the effects of market volatilities on GM and MPC Container 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 MPC Container. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and MPC Container.
Diversification Opportunities for GM and MPC Container
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GM and MPC is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and MPC Container Ships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPC Container Ships 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 MPC Container. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPC Container Ships has no effect on the direction of GM i.e., GM and MPC Container go up and down completely randomly.
Pair Corralation between GM and MPC Container
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.7 times more return on investment than MPC Container. However, General Motors is 1.43 times less risky than MPC Container. It trades about 0.14 of its potential returns per unit of risk. MPC Container Ships is currently generating about 0.08 per unit of risk. If you would invest 4,863 in General Motors on August 25, 2024 and sell it today you would earn a total of 990.00 from holding General Motors or generate 20.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.97% |
| Values | Daily Returns |
General Motors vs. MPC Container Ships
Performance |
| Timeline |
| General Motors |
| MPC Container Ships |
GM and MPC Container Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and MPC Container
The main advantage of trading using opposite GM and MPC Container positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, MPC Container 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 MPC Container will offset losses from the drop in MPC Container's long position.The idea behind General Motors and MPC Container Ships 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.| MPC Container vs. 2020 Bulkers | MPC Container vs. Belships | MPC Container vs. BW LPG | MPC Container vs. REC Silicon ASA |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |