Correlation Between GM and Sprint Bioscience
Can any of the company-specific risk be diversified away by investing in both GM and Sprint Bioscience 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 Sprint Bioscience into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Sprint Bioscience AB, you can compare the effects of market volatilities on GM and Sprint Bioscience 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 Sprint Bioscience. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Sprint Bioscience.
Diversification Opportunities for GM and Sprint Bioscience
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Sprint is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Sprint Bioscience AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprint Bioscience 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 Sprint Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprint Bioscience has no effect on the direction of GM i.e., GM and Sprint Bioscience go up and down completely randomly.
Pair Corralation between GM and Sprint Bioscience
Allowing for the 90-day total investment horizon GM is expected to generate 6.98 times less return on investment than Sprint Bioscience. But when comparing it to its historical volatility, General Motors is 6.28 times less risky than Sprint Bioscience. It trades about 0.05 of its potential returns per unit of risk. Sprint Bioscience AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 57.00 in Sprint Bioscience AB on September 3, 2024 and sell it today you would earn a total of 125.00 from holding Sprint Bioscience AB or generate 219.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.4% |
| Values | Daily Returns |
General Motors vs. Sprint Bioscience AB
Performance |
| Timeline |
| General Motors |
| Sprint Bioscience |
GM and Sprint Bioscience Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Sprint Bioscience
The main advantage of trading using opposite GM and Sprint Bioscience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Sprint Bioscience 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 Sprint Bioscience will offset losses from the drop in Sprint Bioscience's long position.The idea behind General Motors and Sprint Bioscience AB 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.| Sprint Bioscience vs. Cantargia AB | Sprint Bioscience vs. Saniona AB | Sprint Bioscience vs. Acarix AS | Sprint Bioscience vs. Gabather AB |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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