Correlation Between GM and Saint Jean
Can any of the company-specific risk be diversified away by investing in both GM and Saint Jean 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 Saint Jean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Saint Jean Groupe, you can compare the effects of market volatilities on GM and Saint Jean 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 Saint Jean. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Saint Jean.
Diversification Opportunities for GM and Saint Jean
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Saint is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Saint Jean Groupe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saint Jean Groupe 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 Saint Jean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saint Jean Groupe has no effect on the direction of GM i.e., GM and Saint Jean go up and down completely randomly.
Pair Corralation between GM and Saint Jean
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Saint Jean. In addition to that, GM is 1.22 times more volatile than Saint Jean Groupe. It trades about -0.06 of its total potential returns per unit of risk. Saint Jean Groupe is currently generating about 0.1 per unit of volatility. If you would invest 1,970 in Saint Jean Groupe on November 4, 2024 and sell it today you would earn a total of 90.00 from holding Saint Jean Groupe or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
General Motors vs. Saint Jean Groupe
Performance |
| Timeline |
| General Motors |
| Saint Jean Groupe |
GM and Saint Jean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Saint Jean
The main advantage of trading using opposite GM and Saint Jean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Saint Jean 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 Saint Jean will offset losses from the drop in Saint Jean's long position.The idea behind General Motors and Saint Jean Groupe 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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