Correlation Between GM and Rochester Resources
Can any of the company-specific risk be diversified away by investing in both GM and Rochester Resources 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 Rochester Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Rochester Resources, you can compare the effects of market volatilities on GM and Rochester Resources 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 Rochester Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Rochester Resources.
Diversification Opportunities for GM and Rochester Resources
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Rochester is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Rochester Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rochester Resources 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 Rochester Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rochester Resources has no effect on the direction of GM i.e., GM and Rochester Resources go up and down completely randomly.
Pair Corralation between GM and Rochester Resources
If you would invest 5,272 in General Motors on August 25, 2024 and sell it today you would earn a total of 581.00 from holding General Motors or generate 11.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Rochester Resources
Performance |
| Timeline |
| General Motors |
| Rochester Resources |
GM and Rochester Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Rochester Resources
The main advantage of trading using opposite GM and Rochester Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Rochester Resources 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 Rochester Resources will offset losses from the drop in Rochester Resources' long position.The idea behind General Motors and Rochester Resources 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.| Rochester Resources vs. Laurentian Bank | Rochester Resources vs. Financial 15 Split | Rochester Resources vs. Dream Office Real | Rochester Resources vs. Income Financial Trust |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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