Correlation Between GM and Organic Sales
Can any of the company-specific risk be diversified away by investing in both GM and Organic Sales 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 Organic Sales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Organic Sales and, you can compare the effects of market volatilities on GM and Organic Sales 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 Organic Sales. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Organic Sales.
Diversification Opportunities for GM and Organic Sales
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Organic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Organic Sales and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Organic Sales 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 Organic Sales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Organic Sales has no effect on the direction of GM i.e., GM and Organic Sales go up and down completely randomly.
Pair Corralation between GM and Organic Sales
If you would invest 5,197 in General Motors on August 31, 2024 and sell it today you would earn a total of 353.00 from holding General Motors or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Organic Sales and
Performance |
| Timeline |
| General Motors |
| Organic Sales |
GM and Organic Sales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Organic Sales
The main advantage of trading using opposite GM and Organic Sales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Organic Sales 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 Organic Sales will offset losses from the drop in Organic Sales' long position.The idea behind General Motors and Organic Sales and 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.| Organic Sales vs. Porsche Automobile Holding | Organic Sales vs. Ferrari NV | Organic Sales vs. Toyota Motor | Organic Sales vs. General Motors |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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