Correlation Between GM and Innovacom
Can any of the company-specific risk be diversified away by investing in both GM and Innovacom 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 Innovacom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Innovacom, you can compare the effects of market volatilities on GM and Innovacom 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 Innovacom. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Innovacom.
Diversification Opportunities for GM and Innovacom
Pay attention - limited upside
The 3 months correlation between GM and Innovacom is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Innovacom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovacom 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 Innovacom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovacom has no effect on the direction of GM i.e., GM and Innovacom go up and down completely randomly.
Pair Corralation between GM and Innovacom
If you would invest 0.01 in Innovacom on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Innovacom or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Innovacom
Performance |
| Timeline |
| General Motors |
| Innovacom |
GM and Innovacom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Innovacom
The main advantage of trading using opposite GM and Innovacom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Innovacom 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 Innovacom will offset losses from the drop in Innovacom's long position.The idea behind General Motors and Innovacom 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.| Innovacom vs. Fomento Economico Mexicano | Innovacom vs. Celsius Holdings | Innovacom vs. Monster Beverage Corp | Innovacom vs. Diageo PLC ADR |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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