Correlation Between GM and Meshek Energy
Can any of the company-specific risk be diversified away by investing in both GM and Meshek Energy 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 Meshek Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Meshek Energy Renewable Energies, you can compare the effects of market volatilities on GM and Meshek Energy 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 Meshek Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Meshek Energy.
Diversification Opportunities for GM and Meshek Energy
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Meshek is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Meshek Energy Renewable Energi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meshek Energy Renewable 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 Meshek Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meshek Energy Renewable has no effect on the direction of GM i.e., GM and Meshek Energy go up and down completely randomly.
Pair Corralation between GM and Meshek Energy
Allowing for the 90-day total investment horizon GM is expected to generate 1.22 times less return on investment than Meshek Energy. But when comparing it to its historical volatility, General Motors is 1.25 times less risky than Meshek Energy. It trades about 0.07 of its potential returns per unit of risk. Meshek Energy Renewable Energies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 20,480 in Meshek Energy Renewable Energies on August 29, 2024 and sell it today you would earn a total of 760.00 from holding Meshek Energy Renewable Energies or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 82.61% |
| Values | Daily Returns |
General Motors vs. Meshek Energy Renewable Energi
Performance |
| Timeline |
| General Motors |
| Meshek Energy Renewable |
GM and Meshek Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Meshek Energy
The main advantage of trading using opposite GM and Meshek Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Meshek Energy 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 Meshek Energy will offset losses from the drop in Meshek Energy's long position.The idea behind General Motors and Meshek Energy Renewable Energies 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.| Meshek Energy vs. Enlight Renewable Energy | Meshek Energy vs. Energix Renewable Energies | Meshek Energy vs. HERBALIFE | Meshek Energy vs. Brainsway |
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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