Correlation Between GM and SHIMANO INC
Can any of the company-specific risk be diversified away by investing in both GM and SHIMANO INC 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 SHIMANO INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and SHIMANO INC UNSPADR10, you can compare the effects of market volatilities on GM and SHIMANO INC 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 SHIMANO INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and SHIMANO INC.
Diversification Opportunities for GM and SHIMANO INC
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and SHIMANO is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and SHIMANO INC UNSPADR10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIMANO INC UNSPADR10 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 SHIMANO INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIMANO INC UNSPADR10 has no effect on the direction of GM i.e., GM and SHIMANO INC go up and down completely randomly.
Pair Corralation between GM and SHIMANO INC
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.93 times more return on investment than SHIMANO INC. However, General Motors is 1.07 times less risky than SHIMANO INC. It trades about 0.16 of its potential returns per unit of risk. SHIMANO INC UNSPADR10 is currently generating about -0.07 per unit of risk. If you would invest 5,096 in General Motors on September 2, 2024 and sell it today you would earn a total of 463.00 from holding General Motors or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. SHIMANO INC UNSPADR10
Performance |
| Timeline |
| General Motors |
| SHIMANO INC UNSPADR10 |
GM and SHIMANO INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and SHIMANO INC
The main advantage of trading using opposite GM and SHIMANO INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, SHIMANO INC 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 SHIMANO INC will offset losses from the drop in SHIMANO INC's long position.The idea behind General Motors and SHIMANO INC UNSPADR10 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.| SHIMANO INC vs. Li Ning Company | SHIMANO INC vs. Trip Group Limited | SHIMANO INC vs. Superior Plus Corp | SHIMANO INC vs. NMI Holdings |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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