Correlation Between GM and SEP Acquisition
Can any of the company-specific risk be diversified away by investing in both GM and SEP Acquisition 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 SEP Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and SEP Acquisition Corp, you can compare the effects of market volatilities on GM and SEP Acquisition 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 SEP Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and SEP Acquisition.
Diversification Opportunities for GM and SEP Acquisition
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and SEP is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and SEP Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEP Acquisition Corp 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 SEP Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEP Acquisition Corp has no effect on the direction of GM i.e., GM and SEP Acquisition go up and down completely randomly.
Pair Corralation between GM and SEP Acquisition
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.35 times more return on investment than SEP Acquisition. However, General Motors is 2.86 times less risky than SEP Acquisition. It trades about 0.12 of its potential returns per unit of risk. SEP Acquisition Corp is currently generating about 0.03 per unit of risk. If you would invest 2,815 in General Motors on September 14, 2024 and sell it today you would earn a total of 2,436 from holding General Motors or generate 86.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 62.08% |
Values | Daily Returns |
General Motors vs. SEP Acquisition Corp
Performance |
Timeline |
General Motors |
SEP Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and SEP Acquisition Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and SEP Acquisition
The main advantage of trading using opposite GM and SEP Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, SEP Acquisition 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 SEP Acquisition will offset losses from the drop in SEP Acquisition's long position.The idea behind General Motors and SEP Acquisition Corp 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.SEP Acquisition vs. SunOpta | SEP Acquisition vs. AMCON Distributing | SEP Acquisition vs. CDW Corp | SEP Acquisition vs. Paltalk |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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