Correlation Between GM and Silgan Holdings
Can any of the company-specific risk be diversified away by investing in both GM and Silgan Holdings 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 Silgan Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Silgan Holdings, you can compare the effects of market volatilities on GM and Silgan Holdings 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 Silgan Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Silgan Holdings.
Diversification Opportunities for GM and Silgan Holdings
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Silgan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Silgan Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silgan Holdings 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 Silgan Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silgan Holdings has no effect on the direction of GM i.e., GM and Silgan Holdings go up and down completely randomly.
Pair Corralation between GM and Silgan Holdings
Allowing for the 90-day total investment horizon GM is expected to generate 1.01 times less return on investment than Silgan Holdings. In addition to that, GM is 1.66 times more volatile than Silgan Holdings. It trades about 0.24 of its total potential returns per unit of risk. Silgan Holdings is currently generating about 0.39 per unit of volatility. If you would invest 5,095 in Silgan Holdings on August 24, 2024 and sell it today you would earn a total of 558.00 from holding Silgan Holdings or generate 10.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Silgan Holdings
Performance |
| Timeline |
| General Motors |
| Silgan Holdings |
GM and Silgan Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Silgan Holdings
The main advantage of trading using opposite GM and Silgan Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Silgan Holdings 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 Silgan Holdings will offset losses from the drop in Silgan Holdings' long position.The idea behind General Motors and Silgan Holdings 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.| Silgan Holdings vs. Pactiv Evergreen | Silgan Holdings vs. Myers Industries | Silgan Holdings vs. Sonoco Products | Silgan Holdings vs. Avery Dennison Corp |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |