Correlation Between GM and Spencers Retail
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By analyzing existing cross correlation between General Motors and Spencers Retail Limited, you can compare the effects of market volatilities on GM and Spencers Retail 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 Spencers Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Spencers Retail.
Diversification Opportunities for GM and Spencers Retail
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Spencers is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Spencers Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spencers Retail 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 Spencers Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spencers Retail has no effect on the direction of GM i.e., GM and Spencers Retail go up and down completely randomly.
Pair Corralation between GM and Spencers Retail
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.33 times more return on investment than Spencers Retail. However, GM is 1.33 times more volatile than Spencers Retail Limited. It trades about 0.17 of its potential returns per unit of risk. Spencers Retail Limited is currently generating about -0.2 per unit of risk. If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Spencers Retail Limited
Performance |
| Timeline |
| General Motors |
| Spencers Retail |
GM and Spencers Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Spencers Retail
The main advantage of trading using opposite GM and Spencers Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Spencers Retail 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 Spencers Retail will offset losses from the drop in Spencers Retail's long position.The idea behind General Motors and Spencers Retail Limited 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.| Spencers Retail vs. Avonmore Capital Management | Spencers Retail vs. Computer Age Management | Spencers Retail vs. Reliance Communications Limited | Spencers Retail vs. Bikaji Foods International |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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