Correlation Between GM and SPCG Public
Can any of the company-specific risk be diversified away by investing in both GM and SPCG Public 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 SPCG Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and SPCG Public, you can compare the effects of market volatilities on GM and SPCG Public 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 SPCG Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and SPCG Public.
Diversification Opportunities for GM and SPCG Public
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between GM and SPCG is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and SPCG Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPCG Public 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 SPCG Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPCG Public has no effect on the direction of GM i.e., GM and SPCG Public go up and down completely randomly.
Pair Corralation between GM and SPCG Public
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.6 times more return on investment than SPCG Public. However, GM is 1.6 times more volatile than SPCG Public. It trades about 0.03 of its potential returns per unit of risk. SPCG Public is currently generating about -0.05 per unit of risk. If you would invest 3,440 in General Motors on January 6, 2025 and sell it today you would earn a total of 978.00 from holding General Motors or generate 28.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.58% |
| Values | Daily Returns |
General Motors vs. SPCG Public
Performance |
| Timeline |
| General Motors |
| SPCG Public |
GM and SPCG Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and SPCG Public
The main advantage of trading using opposite GM and SPCG Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, SPCG Public 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 SPCG Public will offset losses from the drop in SPCG Public's long position.The idea behind General Motors and SPCG Public 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.| SPCG Public vs. BCPG Public | SPCG Public vs. TPI Polene Power | SPCG Public vs. BTS Group Holdings | SPCG Public vs. Energy Absolute Public |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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