Correlation Between GM and Nationwide Geneva
Can any of the company-specific risk be diversified away by investing in both GM and Nationwide Geneva 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 Nationwide Geneva into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Nationwide Geneva Mid, you can compare the effects of market volatilities on GM and Nationwide Geneva 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 Nationwide Geneva. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Nationwide Geneva.
Diversification Opportunities for GM and Nationwide Geneva
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Nationwide is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Nationwide Geneva Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Geneva Mid 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 Nationwide Geneva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Geneva Mid has no effect on the direction of GM i.e., GM and Nationwide Geneva go up and down completely randomly.
Pair Corralation between GM and Nationwide Geneva
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Nationwide Geneva. In addition to that, GM is 2.89 times more volatile than Nationwide Geneva Mid. It trades about -0.32 of its total potential returns per unit of risk. Nationwide Geneva Mid is currently generating about -0.18 per unit of volatility. If you would invest 1,237 in Nationwide Geneva Mid on November 28, 2024 and sell it today you would lose (37.00) from holding Nationwide Geneva Mid or give up 2.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Nationwide Geneva Mid
Performance |
| Timeline |
| General Motors |
| Nationwide Geneva Mid |
GM and Nationwide Geneva Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Nationwide Geneva
The main advantage of trading using opposite GM and Nationwide Geneva positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Nationwide Geneva 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 Nationwide Geneva will offset losses from the drop in Nationwide Geneva's long position.The idea behind General Motors and Nationwide Geneva Mid 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.| Nationwide Geneva vs. Blackrock Financial Institutions | Nationwide Geneva vs. Fidelity Advisor Financial | Nationwide Geneva vs. Icon Financial Fund | Nationwide Geneva vs. Gabelli Global Financial |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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