Correlation Between GM and ODP
Can any of the company-specific risk be diversified away by investing in both GM and ODP 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 ODP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and The ODP, you can compare the effects of market volatilities on GM and ODP 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 ODP. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and ODP.
Diversification Opportunities for GM and ODP
Pay attention - limited upside
The 3 months correlation between GM and ODP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and The ODP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ODP 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 ODP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ODP has no effect on the direction of GM i.e., GM and ODP go up and down completely randomly.
Pair Corralation between GM and ODP
If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. The ODP
Performance |
| Timeline |
| General Motors |
| ODP |
GM and ODP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and ODP
The main advantage of trading using opposite GM and ODP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, ODP 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 ODP will offset losses from the drop in ODP's long position.The idea behind General Motors and The ODP 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.| ODP vs. Monster Beverage Corp | ODP vs. Verizon Communications | ODP vs. First Majestic Silver | ODP vs. Applied Materials |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |