Correlation Between GM and Pearson Plc

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both GM and Pearson Plc 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 Pearson Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Pearson Plc, you can compare the effects of market volatilities on GM and Pearson Plc 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 Pearson Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Pearson Plc.

Diversification Opportunities for GM and Pearson Plc

GMPearsonDiversified AwayGMPearsonDiversified Away100%
0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between GM and Pearson is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Pearson Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pearson Plc 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 Pearson Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pearson Plc has no effect on the direction of GM i.e., GM and Pearson Plc go up and down completely randomly.

Pair Corralation between GM and Pearson Plc

If you would invest (100.00) in Pearson Plc on November 25, 2024 and sell it today you would earn a total of  100.00  from holding Pearson Plc or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

General Motors  vs.  Pearson Plc

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-505
JavaScript chart by amCharts 3.21.15GM PSORF
       Timeline  
General Motors 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days General Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb464850525456586062
Pearson Plc 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Pearson Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Pearson Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GM and Pearson Plc Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.07-3.05-2.02-1.0-0.0150.891.792.693.59 0.010.020.030.040.050.060.07
JavaScript chart by amCharts 3.21.15GM PSORF
       Returns  

Pair Trading with GM and Pearson Plc

The main advantage of trading using opposite GM and Pearson Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Pearson Plc 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 Pearson Plc will offset losses from the drop in Pearson Plc's long position.
The idea behind General Motors and Pearson Plc 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

Other Complementary Tools

Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
Equity Valuation
Check real value of public entities based on technical and fundamental data
Fundamental Analysis
View fundamental data based on most recent published financial statements