Correlation Between GM and Pioneer
Can any of the company-specific risk be diversified away by investing in both GM and Pioneer 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 Pioneer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Pioneer Motor Public, you can compare the effects of market volatilities on GM and Pioneer 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 Pioneer. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Pioneer.
Diversification Opportunities for GM and Pioneer
Modest diversification
The 3 months correlation between GM and Pioneer is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Pioneer Motor Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Motor Public 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 Pioneer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Motor Public has no effect on the direction of GM i.e., GM and Pioneer go up and down completely randomly.
Pair Corralation between GM and Pioneer
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Pioneer. In addition to that, GM is 1.25 times more volatile than Pioneer Motor Public. It trades about -0.15 of its total potential returns per unit of risk. Pioneer Motor Public is currently generating about -0.18 per unit of volatility. If you would invest 131.00 in Pioneer Motor Public on November 7, 2024 and sell it today you would lose (12.00) from holding Pioneer Motor Public or give up 9.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Pioneer Motor Public
Performance |
| Timeline |
| General Motors |
| Pioneer Motor Public |
GM and Pioneer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Pioneer
The main advantage of trading using opposite GM and Pioneer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Pioneer 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 Pioneer will offset losses from the drop in Pioneer's long position.The idea behind General Motors and Pioneer Motor Public 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.| Pioneer vs. Exotic Food Public | Pioneer vs. Panjawattana Plastic Public | Pioneer vs. Mega Lifesciences Public | Pioneer vs. Phol Dhanya Public |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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