Correlation Between GM and Premier Products
Can any of the company-specific risk be diversified away by investing in both GM and Premier Products 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 Premier Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Premier Products Group, you can compare the effects of market volatilities on GM and Premier Products 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 Premier Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Premier Products.
Diversification Opportunities for GM and Premier Products
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Premier is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Premier Products Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Products 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 Premier Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Products has no effect on the direction of GM i.e., GM and Premier Products go up and down completely randomly.
Pair Corralation between GM and Premier Products
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. Premier Products Group
Performance |
| Timeline |
| General Motors |
| Premier Products |
GM and Premier Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Premier Products
The main advantage of trading using opposite GM and Premier Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Premier Products 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 Premier Products will offset losses from the drop in Premier Products' long position.The idea behind General Motors and Premier Products Group 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.| Premier Products vs. American Leisure Holdings | Premier Products vs. Supurva Healthcare Group | Premier Products vs. China Health Management | Premier Products vs. Embrace Change Acquisition |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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