Correlation Between GM and SITE Centers
Can any of the company-specific risk be diversified away by investing in both GM and SITE Centers 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 SITE Centers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and SITE Centers Corp, you can compare the effects of market volatilities on GM and SITE Centers 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 SITE Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and SITE Centers.
Diversification Opportunities for GM and SITE Centers
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and SITE is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and SITE Centers Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SITE Centers 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 SITE Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SITE Centers Corp has no effect on the direction of GM i.e., GM and SITE Centers go up and down completely randomly.
Pair Corralation between GM and SITE Centers
Allowing for the 90-day total investment horizon General Motors is expected to generate 41.16 times more return on investment than SITE Centers. However, GM is 41.16 times more volatile than SITE Centers Corp. It trades about 0.06 of its potential returns per unit of risk. SITE Centers Corp is currently generating about 0.07 per unit of risk. If you would invest 5,180 in General Motors on September 5, 2024 and sell it today you would earn a total of 156.00 from holding General Motors or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 77.27% |
| Values | Daily Returns |
General Motors vs. SITE Centers Corp
Performance |
| Timeline |
| General Motors |
| SITE Centers Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
GM and SITE Centers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and SITE Centers
The main advantage of trading using opposite GM and SITE Centers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, SITE Centers 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 SITE Centers will offset losses from the drop in SITE Centers' long position.The idea behind General Motors and SITE Centers 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.| SITE Centers vs. The Gabelli Multimedia | SITE Centers vs. The Gabelli Equity | SITE Centers vs. Virtus AllianzGI Convertible | SITE Centers vs. John Hancock Income |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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