Correlation Between GM and FDO INV
Can any of the company-specific risk be diversified away by investing in both GM and FDO INV 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 FDO INV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and FDO INV Imob, you can compare the effects of market volatilities on GM and FDO INV 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 FDO INV. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and FDO INV.
Diversification Opportunities for GM and FDO INV
Excellent diversification
The 3 months correlation between GM and FDO is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and FDO INV Imob in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDO INV Imob 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 FDO INV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDO INV Imob has no effect on the direction of GM i.e., GM and FDO INV go up and down completely randomly.
Pair Corralation between GM and FDO INV
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the FDO INV. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 2.07 times less risky than FDO INV. The stock trades about -0.32 of its potential returns per unit of risk. The FDO INV Imob is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 89,857 in FDO INV Imob on November 28, 2024 and sell it today you would earn a total of 4,644 from holding FDO INV Imob or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
General Motors vs. FDO INV Imob
Performance |
| Timeline |
| General Motors |
| FDO INV Imob |
GM and FDO INV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and FDO INV
The main advantage of trading using opposite GM and FDO INV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, FDO INV 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 FDO INV will offset losses from the drop in FDO INV's long position.The idea behind General Motors and FDO INV Imob 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.| FDO INV vs. BTG Pactual Logstica | FDO INV vs. Plano Plano Desenvolvimento | FDO INV vs. Gen Digital | FDO INV vs. Cable One |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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