Correlation Between GM and Susglobal Energy
Can any of the company-specific risk be diversified away by investing in both GM and Susglobal Energy 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 Susglobal Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Susglobal Energy Corp, you can compare the effects of market volatilities on GM and Susglobal Energy 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 Susglobal Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Susglobal Energy.
Diversification Opportunities for GM and Susglobal Energy
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Susglobal is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Susglobal Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Susglobal Energy 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 Susglobal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Susglobal Energy Corp has no effect on the direction of GM i.e., GM and Susglobal Energy go up and down completely randomly.
Pair Corralation between GM and Susglobal Energy
Allowing for the 90-day total investment horizon GM is expected to generate 2.25 times less return on investment than Susglobal Energy. But when comparing it to its historical volatility, General Motors is 5.62 times less risky than Susglobal Energy. It trades about 0.07 of its potential returns per unit of risk. Susglobal Energy Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2.58 in Susglobal Energy Corp on August 29, 2024 and sell it today you would lose (0.38) from holding Susglobal Energy Corp or give up 14.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Susglobal Energy Corp
Performance |
| Timeline |
| General Motors |
| Susglobal Energy Corp |
GM and Susglobal Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Susglobal Energy
The main advantage of trading using opposite GM and Susglobal Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Susglobal Energy 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 Susglobal Energy will offset losses from the drop in Susglobal Energy's long position.The idea behind General Motors and Susglobal Energy 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.| Susglobal Energy vs. Republic Services | Susglobal Energy vs. Waste Connections | Susglobal Energy vs. Clean Harbors | Susglobal Energy vs. Gfl Environmental 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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