Correlation Between GM and Triple Point
Can any of the company-specific risk be diversified away by investing in both GM and Triple Point 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 Triple Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Triple Point Social, you can compare the effects of market volatilities on GM and Triple Point 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 Triple Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Triple Point.
Diversification Opportunities for GM and Triple Point
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Triple is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Triple Point Social in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triple Point Social 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 Triple Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triple Point Social has no effect on the direction of GM i.e., GM and Triple Point go up and down completely randomly.
Pair Corralation between GM and Triple Point
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.97 times more return on investment than Triple Point. However, GM is 1.97 times more volatile than Triple Point Social. It trades about 0.08 of its potential returns per unit of risk. Triple Point Social is currently generating about 0.08 per unit of risk. If you would invest 4,539 in General Motors on September 3, 2024 and sell it today you would earn a total of 1,020 from holding General Motors or generate 22.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.66% |
| Values | Daily Returns |
General Motors vs. Triple Point Social
Performance |
| Timeline |
| General Motors |
| Triple Point Social |
GM and Triple Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Triple Point
The main advantage of trading using opposite GM and Triple Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Triple Point 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 Triple Point will offset losses from the drop in Triple Point's long position.The idea behind General Motors and Triple Point Social 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.| Triple Point vs. TR Property Investment | Triple Point vs. FC Investment Trust | Triple Point vs. Zegona Communications Plc | Triple Point vs. Federal Realty Investment |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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