Correlation Between GM and Iffe Futura
Can any of the company-specific risk be diversified away by investing in both GM and Iffe Futura 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 Iffe Futura into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Iffe Futura SA, you can compare the effects of market volatilities on GM and Iffe Futura 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 Iffe Futura. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Iffe Futura.
Diversification Opportunities for GM and Iffe Futura
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Iffe is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Iffe Futura SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iffe Futura SA 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 Iffe Futura. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iffe Futura SA has no effect on the direction of GM i.e., GM and Iffe Futura go up and down completely randomly.
Pair Corralation between GM and Iffe Futura
Allowing for the 90-day total investment horizon GM is expected to generate 1.25 times less return on investment than Iffe Futura. In addition to that, GM is 1.59 times more volatile than Iffe Futura SA. It trades about 0.16 of its total potential returns per unit of risk. Iffe Futura SA is currently generating about 0.32 per unit of volatility. If you would invest 62.00 in Iffe Futura SA on September 2, 2024 and sell it today you would earn a total of 8.00 from holding Iffe Futura SA or generate 12.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Iffe Futura SA
Performance |
| Timeline |
| General Motors |
| Iffe Futura SA |
GM and Iffe Futura Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Iffe Futura
The main advantage of trading using opposite GM and Iffe Futura positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Iffe Futura 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 Iffe Futura will offset losses from the drop in Iffe Futura's long position.The idea behind General Motors and Iffe Futura SA 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.| Iffe Futura vs. Metrovacesa SA | Iffe Futura vs. Elecnor SA | Iffe Futura vs. Mapfre | Iffe Futura vs. Amper SA |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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