Correlation Between GM and Response Oncology
Can any of the company-specific risk be diversified away by investing in both GM and Response Oncology 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 Response Oncology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Response Oncology, you can compare the effects of market volatilities on GM and Response Oncology 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 Response Oncology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Response Oncology.
Diversification Opportunities for GM and Response Oncology
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Response is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Response Oncology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Response Oncology 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 Response Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Response Oncology has no effect on the direction of GM i.e., GM and Response Oncology go up and down completely randomly.
Pair Corralation between GM and Response Oncology
If you would invest 3,297 in General Motors on September 19, 2024 and sell it today you would earn a total of 1,818 from holding General Motors or generate 55.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 5.25% |
| Values | Daily Returns |
General Motors vs. Response Oncology
Performance |
| Timeline |
| General Motors |
| Response Oncology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Response Oncology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Response Oncology
The main advantage of trading using opposite GM and Response Oncology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Response Oncology 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 Response Oncology will offset losses from the drop in Response Oncology's long position.The idea behind General Motors and Response Oncology 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.| Response Oncology vs. SEI Investments | Response Oncology vs. Seadrill Limited | Response Oncology vs. Freedom Holding Corp | Response Oncology vs. Morgan Stanley |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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