Correlation Between GM and Ricebran Tech
Can any of the company-specific risk be diversified away by investing in both GM and Ricebran Tech 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 Ricebran Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Ricebran Tech, you can compare the effects of market volatilities on GM and Ricebran Tech 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 Ricebran Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Ricebran Tech.
Diversification Opportunities for GM and Ricebran Tech
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Ricebran is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Ricebran Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ricebran Tech 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 Ricebran Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ricebran Tech has no effect on the direction of GM i.e., GM and Ricebran Tech go up and down completely randomly.
Pair Corralation between GM and Ricebran Tech
If you would invest 5,273 in General Motors on August 28, 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 | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
General Motors vs. Ricebran Tech
Performance |
| Timeline |
| General Motors |
| Ricebran Tech |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Ricebran Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Ricebran Tech
The main advantage of trading using opposite GM and Ricebran Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Ricebran Tech 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 Ricebran Tech will offset losses from the drop in Ricebran Tech's long position.The idea behind General Motors and Ricebran Tech 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.| Ricebran Tech vs. ReTo Eco Solutions | Ricebran Tech vs. TDH Holdings | Ricebran Tech vs. Xcel Brands | Ricebran Tech vs. Performant Financial |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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