Correlation Between GM and Repsol SA
Can any of the company-specific risk be diversified away by investing in both GM and Repsol SA 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 Repsol SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Repsol SA, you can compare the effects of market volatilities on GM and Repsol SA 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 Repsol SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Repsol SA.
Diversification Opportunities for GM and Repsol SA
Poor diversification
The 3 months correlation between GM and Repsol is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Repsol SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repsol SA 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 Repsol SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repsol SA has no effect on the direction of GM i.e., GM and Repsol SA go up and down completely randomly.
Pair Corralation between GM and Repsol SA
If you would invest 5,273 in General Motors on August 28, 2024 and sell it today you would earn a total of 747.00 from holding General Motors or generate 14.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
General Motors vs. Repsol SA
Performance |
| Timeline |
| General Motors |
| Repsol SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Repsol SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Repsol SA
The main advantage of trading using opposite GM and Repsol SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Repsol SA 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 Repsol SA will offset losses from the drop in Repsol SA's long position.The idea behind General Motors and Repsol SA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |