Correlation Between GM and Pinelawn Cemetery
Can any of the company-specific risk be diversified away by investing in both GM and Pinelawn Cemetery 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 Pinelawn Cemetery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Pinelawn Cemetery, you can compare the effects of market volatilities on GM and Pinelawn Cemetery 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 Pinelawn Cemetery. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Pinelawn Cemetery.
Diversification Opportunities for GM and Pinelawn Cemetery
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Pinelawn is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Pinelawn Cemetery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinelawn Cemetery 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 Pinelawn Cemetery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinelawn Cemetery has no effect on the direction of GM i.e., GM and Pinelawn Cemetery go up and down completely randomly.
Pair Corralation between GM and Pinelawn Cemetery
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.96 times more return on investment than Pinelawn Cemetery. However, General Motors is 1.05 times less risky than Pinelawn Cemetery. It trades about 0.05 of its potential returns per unit of risk. Pinelawn Cemetery is currently generating about 0.0 per unit of risk. If you would invest 3,757 in General Motors on August 30, 2024 and sell it today you would earn a total of 1,793 from holding General Motors or generate 47.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 73.13% |
| Values | Daily Returns |
General Motors vs. Pinelawn Cemetery
Performance |
| Timeline |
| General Motors |
| Pinelawn Cemetery |
GM and Pinelawn Cemetery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Pinelawn Cemetery
The main advantage of trading using opposite GM and Pinelawn Cemetery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Pinelawn Cemetery 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 Pinelawn Cemetery will offset losses from the drop in Pinelawn Cemetery's long position.The idea behind General Motors and Pinelawn Cemetery 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.| Pinelawn Cemetery vs. Daily Journal Corp | Pinelawn Cemetery vs. Pearson PLC ADR | Pinelawn Cemetery vs. Lincoln Educational Services | Pinelawn Cemetery vs. Asbury Automotive Group |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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