Correlation Between GM and Social Media
Can any of the company-specific risk be diversified away by investing in both GM and Social Media 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 Social Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Social Media Venture, you can compare the effects of market volatilities on GM and Social Media 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 Social Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Social Media.
Diversification Opportunities for GM and Social Media
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Social is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Social Media Venture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Social Media Venture 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 Social Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Social Media Venture has no effect on the direction of GM i.e., GM and Social Media go up and down completely randomly.
Pair Corralation between GM and Social Media
If you would invest 5,180 in General Motors on September 5, 2024 and sell it today you would earn a total of 186.00 from holding General Motors or generate 3.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
General Motors vs. Social Media Venture
Performance |
| Timeline |
| General Motors |
| Social Media Venture |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Social Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Social Media
The main advantage of trading using opposite GM and Social Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Social Media 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 Social Media will offset losses from the drop in Social Media's long position.The idea behind General Motors and Social Media Venture 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.| Social Media vs. Hooker Furniture | Social Media vs. Mangazeya Mining | Social Media vs. Western Sierra Mining | Social Media vs. Vindicator Silver Lead Mining |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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