Correlation Between GM and Pennsylvania Real
Can any of the company-specific risk be diversified away by investing in both GM and Pennsylvania Real 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 Pennsylvania Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Pennsylvania Real Estate, you can compare the effects of market volatilities on GM and Pennsylvania Real 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 Pennsylvania Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Pennsylvania Real.
Diversification Opportunities for GM and Pennsylvania Real
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Pennsylvania is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Pennsylvania Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pennsylvania Real Estate 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 Pennsylvania Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pennsylvania Real Estate has no effect on the direction of GM i.e., GM and Pennsylvania Real go up and down completely randomly.
Pair Corralation between GM and Pennsylvania Real
If you would invest 3,816 in General Motors on November 5, 2024 and sell it today you would earn a total of 1,130 from holding General Motors or generate 29.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.4% |
| Values | Daily Returns |
General Motors vs. Pennsylvania Real Estate
Performance |
| Timeline |
| General Motors |
| Pennsylvania Real Estate |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Pennsylvania Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Pennsylvania Real
The main advantage of trading using opposite GM and Pennsylvania Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Pennsylvania Real 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 Pennsylvania Real will offset losses from the drop in Pennsylvania Real's long position.The idea behind General Motors and Pennsylvania Real Estate 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.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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