Correlation Between GM and ENDRA Life
Can any of the company-specific risk be diversified away by investing in both GM and ENDRA Life 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 ENDRA Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and ENDRA Life Sciences, you can compare the effects of market volatilities on GM and ENDRA Life 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 ENDRA Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and ENDRA Life.
Diversification Opportunities for GM and ENDRA Life
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and ENDRA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and ENDRA Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENDRA Life Sciences 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 ENDRA Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENDRA Life Sciences has no effect on the direction of GM i.e., GM and ENDRA Life go up and down completely randomly.
Pair Corralation between GM and ENDRA Life
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.14 times more return on investment than ENDRA Life. However, General Motors is 7.04 times less risky than ENDRA Life. It trades about 0.08 of its potential returns per unit of risk. ENDRA Life Sciences is currently generating about -0.12 per unit of risk. If you would invest 4,551 in General Motors on September 1, 2024 and sell it today you would earn a total of 1,008 from holding General Motors or generate 22.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. ENDRA Life Sciences
Performance |
| Timeline |
| General Motors |
| ENDRA Life Sciences |
GM and ENDRA Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and ENDRA Life
The main advantage of trading using opposite GM and ENDRA Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, ENDRA Life 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 ENDRA Life will offset losses from the drop in ENDRA Life's long position.The idea behind General Motors and ENDRA Life Sciences 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.| ENDRA Life vs. Burning Rock Biotech | ENDRA Life vs. Neuronetics | ENDRA Life vs. DarioHealth Corp | ENDRA Life vs. Sera Prognostics |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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