Correlation Between GM and Stock Exchange
Can any of the company-specific risk be diversified away by investing in both GM and Stock Exchange 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 Stock Exchange into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Stock Exchange Of, you can compare the effects of market volatilities on GM and Stock Exchange 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 Stock Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Stock Exchange.
Diversification Opportunities for GM and Stock Exchange
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and Stock is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Stock Exchange Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stock Exchange 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 Stock Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stock Exchange has no effect on the direction of GM i.e., GM and Stock Exchange go up and down completely randomly.
Pair Corralation between GM and Stock Exchange
Allowing for the 90-day total investment horizon General Motors is expected to generate 4.72 times more return on investment than Stock Exchange. However, GM is 4.72 times more volatile than Stock Exchange Of. It trades about 0.17 of its potential returns per unit of risk. Stock Exchange Of is currently generating about -0.2 per unit of risk. If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. Stock Exchange Of
Performance |
| Timeline |
GM and Stock Exchange Volatility Contrast
Predicted Return Density |
| Returns |
General Motors
Pair trading matchups for GM
Stock Exchange Of
Pair trading matchups for Stock Exchange
Pair Trading with GM and Stock Exchange
The main advantage of trading using opposite GM and Stock Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Stock Exchange 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 Stock Exchange will offset losses from the drop in Stock Exchange's long position.The idea behind General Motors and Stock Exchange Of 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.| Stock Exchange vs. Porn Prom Metal | Stock Exchange vs. WHA Industrial Leasehold | Stock Exchange vs. 2S Metal Public | Stock Exchange vs. Turnkey Communication Services |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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