Correlation Between GM and Quilter PLC
Can any of the company-specific risk be diversified away by investing in both GM and Quilter 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 Quilter 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 Quilter PLC, you can compare the effects of market volatilities on GM and Quilter 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 Quilter PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Quilter PLC.
Diversification Opportunities for GM and Quilter PLC
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Quilter is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Quilter PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quilter 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 Quilter PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quilter PLC has no effect on the direction of GM i.e., GM and Quilter PLC go up and down completely randomly.
Pair Corralation between GM and Quilter PLC
Allowing for the 90-day total investment horizon General Motors is expected to generate 3.27 times more return on investment than Quilter PLC. However, GM is 3.27 times more volatile than Quilter PLC. It trades about 0.07 of its potential returns per unit of risk. Quilter PLC is currently generating about -0.23 per unit of risk. If you would invest 5,273 in General Motors on August 29, 2024 and sell it today you would earn a total of 206.00 from holding General Motors or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Quilter PLC
Performance |
| Timeline |
| General Motors |
| Quilter PLC |
GM and Quilter PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Quilter PLC
The main advantage of trading using opposite GM and Quilter PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Quilter 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 Quilter PLC will offset losses from the drop in Quilter PLC's long position.The idea behind General Motors and Quilter 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.| Quilter PLC vs. Catalyst Media Group | Quilter PLC vs. Oncimmune Holdings plc | Quilter PLC vs. Invesco Health Care | Quilter PLC vs. Coor Service Management |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |