Correlation Between GM and Star Alliance
Can any of the company-specific risk be diversified away by investing in both GM and Star Alliance 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 Star Alliance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Star Alliance International, you can compare the effects of market volatilities on GM and Star Alliance 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 Star Alliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Star Alliance.
Diversification Opportunities for GM and Star Alliance
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Star is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Star Alliance International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Alliance Intern 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 Star Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Alliance Intern has no effect on the direction of GM i.e., GM and Star Alliance go up and down completely randomly.
Pair Corralation between GM and Star Alliance
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.29 times more return on investment than Star Alliance. However, General Motors is 3.46 times less risky than Star Alliance. It trades about 0.07 of its potential returns per unit of risk. Star Alliance International is currently generating about -0.09 per unit of risk. If you would invest 5,273 in General Motors on August 29, 2024 and sell it today you would earn a total of 206.00 from holding General Motors or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Star Alliance International
Performance |
| Timeline |
| General Motors |
| Star Alliance Intern |
GM and Star Alliance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Star Alliance
The main advantage of trading using opposite GM and Star Alliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Star Alliance 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 Star Alliance will offset losses from the drop in Star Alliance's long position.The idea behind General Motors and Star Alliance International 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.| Star Alliance vs. Vior Inc | Star Alliance vs. Norsemont Mining | Star Alliance vs. Big Ridge Gold | Star Alliance vs. Cerrado Gold |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |