Correlation Between GM and NATION MEDIA
Can any of the company-specific risk be diversified away by investing in both GM and NATION MEDIA 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 NATION MEDIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and NATION MEDIA GROUP, you can compare the effects of market volatilities on GM and NATION MEDIA 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 NATION MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and NATION MEDIA.
Diversification Opportunities for GM and NATION MEDIA
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and NATION is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and NATION MEDIA GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATION MEDIA GROUP 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 NATION MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATION MEDIA GROUP has no effect on the direction of GM i.e., GM and NATION MEDIA go up and down completely randomly.
Pair Corralation between GM and NATION MEDIA
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.7 times more return on investment than NATION MEDIA. However, General Motors is 1.43 times less risky than NATION MEDIA. It trades about 0.05 of its potential returns per unit of risk. NATION MEDIA GROUP is currently generating about 0.01 per unit of risk. If you would invest 3,849 in General Motors on December 11, 2024 and sell it today you would earn a total of 979.00 from holding General Motors or generate 25.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.5% |
| Values | Daily Returns |
General Motors vs. NATION MEDIA GROUP
Performance |
| Timeline |
| General Motors |
| NATION MEDIA GROUP |
GM and NATION MEDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and NATION MEDIA
The main advantage of trading using opposite GM and NATION MEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, NATION MEDIA 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 NATION MEDIA will offset losses from the drop in NATION MEDIA's long position.The idea behind General Motors and NATION MEDIA GROUP 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.| NATION MEDIA vs. EAST AFRICAN BREWERIES | ||
| NATION MEDIA vs. TANZANIA BREWERIES LTD | ||
| NATION MEDIA vs. NATIONAL INVESTMENT PANY | ||
| NATION MEDIA vs. SWISSPORT TANZANIA LTD |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |