Correlation Between GM and Pernod Ricard
Can any of the company-specific risk be diversified away by investing in both GM and Pernod Ricard 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 Pernod Ricard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Pernod Ricard SA, you can compare the effects of market volatilities on GM and Pernod Ricard 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 Pernod Ricard. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Pernod Ricard.
Diversification Opportunities for GM and Pernod Ricard
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Pernod is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Pernod Ricard SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pernod Ricard SA 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 Pernod Ricard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pernod Ricard SA has no effect on the direction of GM i.e., GM and Pernod Ricard go up and down completely randomly.
Pair Corralation between GM and Pernod Ricard
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.26 times more return on investment than Pernod Ricard. However, GM is 1.26 times more volatile than Pernod Ricard SA. It trades about 0.07 of its potential returns per unit of risk. Pernod Ricard SA is currently generating about -0.1 per unit of risk. If you would invest 3,889 in General Motors on August 28, 2024 and sell it today you would earn a total of 2,131 from holding General Motors or generate 54.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Pernod Ricard SA
Performance |
| Timeline |
| General Motors |
| Pernod Ricard SA |
GM and Pernod Ricard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Pernod Ricard
The main advantage of trading using opposite GM and Pernod Ricard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Pernod Ricard 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 Pernod Ricard will offset losses from the drop in Pernod Ricard's long position.The idea behind General Motors and Pernod Ricard SA 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.| Pernod Ricard vs. Diageo PLC ADR | Pernod Ricard vs. Constellation Brands Class | Pernod Ricard vs. Morningstar Unconstrained Allocation | Pernod Ricard vs. SEI Investments |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |