Correlation Between GM and M Vision
Can any of the company-specific risk be diversified away by investing in both GM and M Vision 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 M Vision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and M Vision Public, you can compare the effects of market volatilities on GM and M Vision 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 M Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and M Vision.
Diversification Opportunities for GM and M Vision
Very good diversification
The 3 months correlation between GM and MVP is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and M Vision Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Vision Public 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 M Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Vision Public has no effect on the direction of GM i.e., GM and M Vision go up and down completely randomly.
Pair Corralation between GM and M Vision
Allowing for the 90-day total investment horizon GM is expected to generate 61.9 times less return on investment than M Vision. But when comparing it to its historical volatility, General Motors is 49.98 times less risky than M Vision. It trades about 0.1 of its potential returns per unit of risk. M Vision Public is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 0.00 in M Vision Public on September 3, 2024 and sell it today you would earn a total of 71.00 from holding M Vision Public or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
General Motors vs. M Vision Public
Performance |
| Timeline |
| General Motors |
| M Vision Public |
GM and M Vision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and M Vision
The main advantage of trading using opposite GM and M Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, M Vision 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 M Vision will offset losses from the drop in M Vision's long position.The idea behind General Motors and M Vision Public 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.| M Vision vs. Nex Point Public | M Vision vs. K W Metal | M Vision vs. NCL International Logistics | M Vision vs. Leo Global Logistics |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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