Correlation Between GM and Syntec Optics
Can any of the company-specific risk be diversified away by investing in both GM and Syntec Optics 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 Syntec Optics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Syntec Optics Holdings, you can compare the effects of market volatilities on GM and Syntec Optics 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 Syntec Optics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Syntec Optics.
Diversification Opportunities for GM and Syntec Optics
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Syntec is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Syntec Optics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Syntec Optics Holdings 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 Syntec Optics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Syntec Optics Holdings has no effect on the direction of GM i.e., GM and Syntec Optics go up and down completely randomly.
Pair Corralation between GM and Syntec Optics
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.28 times more return on investment than Syntec Optics. However, General Motors is 3.56 times less risky than Syntec Optics. It trades about 0.0 of its potential returns per unit of risk. Syntec Optics Holdings is currently generating about -0.22 per unit of risk. If you would invest 5,418 in General Motors on October 26, 2024 and sell it today you would lose (27.00) from holding General Motors or give up 0.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Syntec Optics Holdings
Performance |
| Timeline |
| General Motors |
| Syntec Optics Holdings |
GM and Syntec Optics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Syntec Optics
The main advantage of trading using opposite GM and Syntec Optics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Syntec Optics 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 Syntec Optics will offset losses from the drop in Syntec Optics' long position.The idea behind General Motors and Syntec Optics Holdings 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.| Syntec Optics vs. Rigetti Computing | Syntec Optics vs. IONQ WT | Syntec Optics vs. Arqit Quantum Warrants | Syntec Optics vs. QBTS WT |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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