Correlation Between GM and Senti Biosciences
Can any of the company-specific risk be diversified away by investing in both GM and Senti Biosciences 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 Senti Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Senti Biosciences, you can compare the effects of market volatilities on GM and Senti Biosciences 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 Senti Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Senti Biosciences.
Diversification Opportunities for GM and Senti Biosciences
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Senti is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Senti Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senti Biosciences 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 Senti Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senti Biosciences has no effect on the direction of GM i.e., GM and Senti Biosciences go up and down completely randomly.
Pair Corralation between GM and Senti Biosciences
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.56 times more return on investment than Senti Biosciences. However, General Motors is 1.8 times less risky than Senti Biosciences. It trades about 0.1 of its potential returns per unit of risk. Senti Biosciences is currently generating about -0.05 per unit of risk. If you would invest 4,829 in General Motors on August 31, 2024 and sell it today you would earn a total of 721.00 from holding General Motors or generate 14.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Senti Biosciences
Performance |
| Timeline |
| General Motors |
| Senti Biosciences |
GM and Senti Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Senti Biosciences
The main advantage of trading using opposite GM and Senti Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Senti Biosciences 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 Senti Biosciences will offset losses from the drop in Senti Biosciences' long position.The idea behind General Motors and Senti Biosciences 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.| Senti Biosciences vs. Cadrenal Therapeutics, Common | Senti Biosciences vs. Foghorn Therapeutics | Senti Biosciences vs. Quoin Pharmaceuticals Ltd | Senti Biosciences vs. SAB Biotherapeutics |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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