Correlation Between GM and OPEN HOUSE
Can any of the company-specific risk be diversified away by investing in both GM and OPEN HOUSE 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 OPEN HOUSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and OPEN HOUSE GROUP, you can compare the effects of market volatilities on GM and OPEN HOUSE 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 OPEN HOUSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and OPEN HOUSE.
Diversification Opportunities for GM and OPEN HOUSE
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and OPEN is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and OPEN HOUSE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPEN HOUSE 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 OPEN HOUSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPEN HOUSE GROUP has no effect on the direction of GM i.e., GM and OPEN HOUSE go up and down completely randomly.
Pair Corralation between GM and OPEN HOUSE
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.84 times more return on investment than OPEN HOUSE. However, General Motors is 1.19 times less risky than OPEN HOUSE. It trades about 0.12 of its potential returns per unit of risk. OPEN HOUSE GROUP is currently generating about 0.06 per unit of risk. If you would invest 3,563 in General Motors on August 25, 2024 and sell it today you would earn a total of 2,290 from holding General Motors or generate 64.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.28% |
| Values | Daily Returns |
General Motors vs. OPEN HOUSE GROUP
Performance |
| Timeline |
| General Motors |
| OPEN HOUSE GROUP |
GM and OPEN HOUSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and OPEN HOUSE
The main advantage of trading using opposite GM and OPEN HOUSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, OPEN HOUSE 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 OPEN HOUSE will offset losses from the drop in OPEN HOUSE's long position.The idea behind General Motors and OPEN HOUSE 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.| OPEN HOUSE vs. Superior Plus Corp | OPEN HOUSE vs. NMI Holdings | OPEN HOUSE vs. Origin Agritech | OPEN HOUSE vs. SIVERS SEMICONDUCTORS AB |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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