Correlation Between GM and S1 Corp
Can any of the company-specific risk be diversified away by investing in both GM and S1 Corp 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 S1 Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and S1 Corp, you can compare the effects of market volatilities on GM and S1 Corp 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 S1 Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and S1 Corp.
Diversification Opportunities for GM and S1 Corp
Pay attention - limited upside
The 3 months correlation between GM and SONE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and S1 Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on S1 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 S1 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of S1 Corp has no effect on the direction of GM i.e., GM and S1 Corp go up and down completely randomly.
Pair Corralation between GM and S1 Corp
If you would invest 4,561 in General Motors on September 5, 2024 and sell it today you would earn a total of 805.00 from holding General Motors or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
General Motors vs. S1 Corp
Performance |
| Timeline |
| General Motors |
| S1 Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and S1 Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and S1 Corp
The main advantage of trading using opposite GM and S1 Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, S1 Corp 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 S1 Corp will offset losses from the drop in S1 Corp's long position.The idea behind General Motors and S1 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.| S1 Corp vs. Naked Wines plc | S1 Corp vs. FactSet Research Systems | S1 Corp vs. Treasury Wine Estates | S1 Corp vs. Nascent Wine |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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