Correlation Between GM and Rich Sport
Can any of the company-specific risk be diversified away by investing in both GM and Rich Sport 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 Rich Sport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Rich Sport Public, you can compare the effects of market volatilities on GM and Rich Sport 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 Rich Sport. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Rich Sport.
Diversification Opportunities for GM and Rich Sport
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Rich is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Rich Sport Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rich Sport Public 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 Rich Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rich Sport Public has no effect on the direction of GM i.e., GM and Rich Sport go up and down completely randomly.
Pair Corralation between GM and Rich Sport
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Rich Sport. In addition to that, GM is 2.32 times more volatile than Rich Sport Public. It trades about -0.16 of its total potential returns per unit of risk. Rich Sport Public is currently generating about 0.05 per unit of volatility. If you would invest 191.00 in Rich Sport Public on September 14, 2024 and sell it today you would earn a total of 2.00 from holding Rich Sport Public or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
General Motors vs. Rich Sport Public
Performance |
| Timeline |
| General Motors |
| Rich Sport Public |
GM and Rich Sport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Rich Sport
The main advantage of trading using opposite GM and Rich Sport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Rich Sport 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 Rich Sport will offset losses from the drop in Rich Sport's long position.The idea behind General Motors and Rich Sport Public 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.| Rich Sport vs. Samart Public | Rich Sport vs. Jasmine International Public | Rich Sport vs. Jay Mart Public | Rich Sport vs. MC Group Public |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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