Correlation Between GM and MyMD Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both GM and MyMD Pharmaceuticals 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 MyMD Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and MyMD Pharmaceuticals, you can compare the effects of market volatilities on GM and MyMD Pharmaceuticals 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 MyMD Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and MyMD Pharmaceuticals.
Diversification Opportunities for GM and MyMD Pharmaceuticals
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and MyMD is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and MyMD Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MyMD Pharmaceuticals 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 MyMD Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MyMD Pharmaceuticals has no effect on the direction of GM i.e., GM and MyMD Pharmaceuticals go up and down completely randomly.
Pair Corralation between GM and MyMD Pharmaceuticals
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.27 times more return on investment than MyMD Pharmaceuticals. However, General Motors is 3.66 times less risky than MyMD Pharmaceuticals. It trades about 0.04 of its potential returns per unit of risk. MyMD Pharmaceuticals is currently generating about -0.1 per unit of risk. If you would invest 4,048 in General Motors on September 26, 2024 and sell it today you would earn a total of 1,303 from holding General Motors or generate 32.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 79.37% |
| Values | Daily Returns |
General Motors vs. MyMD Pharmaceuticals
Performance |
| Timeline |
| General Motors |
| MyMD Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and MyMD Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and MyMD Pharmaceuticals
The main advantage of trading using opposite GM and MyMD Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, MyMD Pharmaceuticals 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 MyMD Pharmaceuticals will offset losses from the drop in MyMD Pharmaceuticals' long position.The idea behind General Motors and MyMD Pharmaceuticals 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.| MyMD Pharmaceuticals vs. Recursion Pharmaceuticals | MyMD Pharmaceuticals vs. Atea Pharmaceuticals | MyMD Pharmaceuticals vs. Unity Biotechnology | MyMD Pharmaceuticals vs. Replimune Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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