Correlation Between GM and Elysee Development
Can any of the company-specific risk be diversified away by investing in both GM and Elysee Development 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 Elysee Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Elysee Development Corp, you can compare the effects of market volatilities on GM and Elysee Development 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 Elysee Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Elysee Development.
Diversification Opportunities for GM and Elysee Development
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Elysee is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Elysee Development Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elysee Development Corp 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 Elysee Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elysee Development Corp has no effect on the direction of GM i.e., GM and Elysee Development go up and down completely randomly.
Pair Corralation between GM and Elysee Development
Allowing for the 90-day total investment horizon GM is expected to generate 2.35 times less return on investment than Elysee Development. But when comparing it to its historical volatility, General Motors is 2.56 times less risky than Elysee Development. It trades about 0.1 of its potential returns per unit of risk. Elysee Development Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Elysee Development Corp on September 2, 2024 and sell it today you would earn a total of 5.00 from holding Elysee Development Corp or generate 29.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.97% |
| Values | Daily Returns |
General Motors vs. Elysee Development Corp
Performance |
| Timeline |
| General Motors |
| Elysee Development Corp |
GM and Elysee Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Elysee Development
The main advantage of trading using opposite GM and Elysee Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Elysee Development 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 Elysee Development will offset losses from the drop in Elysee Development's long position.The idea behind General Motors and Elysee Development Corp 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.| Elysee Development vs. Ameriprise Financial | Elysee Development vs. Ares Management Corp | Elysee Development vs. Superior Plus Corp | Elysee Development vs. NMI Holdings |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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