Correlation Between GM and METISA Metalrgica
Can any of the company-specific risk be diversified away by investing in both GM and METISA Metalrgica 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 METISA Metalrgica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and METISA Metalrgica Timboense, you can compare the effects of market volatilities on GM and METISA Metalrgica 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 METISA Metalrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and METISA Metalrgica.
Diversification Opportunities for GM and METISA Metalrgica
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and METISA is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and METISA Metalrgica Timboense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METISA Metalrgica 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 METISA Metalrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METISA Metalrgica has no effect on the direction of GM i.e., GM and METISA Metalrgica go up and down completely randomly.
Pair Corralation between GM and METISA Metalrgica
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.32 times more return on investment than METISA Metalrgica. However, GM is 1.32 times more volatile than METISA Metalrgica Timboense. It trades about 0.07 of its potential returns per unit of risk. METISA Metalrgica Timboense is currently generating about 0.09 per unit of risk. If you would invest 5,256 in General Motors on October 24, 2024 and sell it today you would earn a total of 133.00 from holding General Motors or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. METISA Metalrgica Timboense
Performance |
| Timeline |
| General Motors |
| METISA Metalrgica |
GM and METISA Metalrgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and METISA Metalrgica
The main advantage of trading using opposite GM and METISA Metalrgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, METISA Metalrgica 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 METISA Metalrgica will offset losses from the drop in METISA Metalrgica's long position.The idea behind General Motors and METISA Metalrgica Timboense 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.| METISA Metalrgica vs. Schulz SA | METISA Metalrgica vs. Fras le SA | METISA Metalrgica vs. PBG SA | METISA Metalrgica vs. Springs Global Participaes |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |