Correlation Between GM and Nationwide
Can any of the company-specific risk be diversified away by investing in both GM and Nationwide 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 Nationwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Nationwide, you can compare the effects of market volatilities on GM and Nationwide 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 Nationwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Nationwide.
Diversification Opportunities for GM and Nationwide
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Nationwide is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Nationwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide 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 Nationwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide has no effect on the direction of GM i.e., GM and Nationwide go up and down completely randomly.
Pair Corralation between GM and Nationwide
If you would invest 3,507 in General Motors on November 28, 2024 and sell it today you would earn a total of 1,418 from holding General Motors or generate 40.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
General Motors vs. Nationwide
Performance |
| Timeline |
| General Motors |
| Nationwide |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
GM and Nationwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Nationwide
The main advantage of trading using opposite GM and Nationwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Nationwide 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 Nationwide will offset losses from the drop in Nationwide's long position.The idea behind General Motors and Nationwide 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.| Nationwide vs. Vanguard Total Stock | Nationwide vs. SPDR SP 500 | Nationwide vs. iShares Core SP | Nationwide vs. Vanguard Dividend Appreciation |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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