Correlation Between GM and Swedish Match
Can any of the company-specific risk be diversified away by investing in both GM and Swedish Match 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 Swedish Match into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Swedish Match Ab, you can compare the effects of market volatilities on GM and Swedish Match 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 Swedish Match. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Swedish Match.
Diversification Opportunities for GM and Swedish Match
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Swedish is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Swedish Match Ab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedish Match Ab 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 Swedish Match. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedish Match Ab has no effect on the direction of GM i.e., GM and Swedish Match go up and down completely randomly.
Pair Corralation between GM and Swedish Match
If you would invest 3,507 in General Motors on November 28, 2024 and sell it today you would earn a total of 1,418 from holding General Motors or generate 40.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
General Motors vs. Swedish Match Ab
Performance |
| Timeline |
| General Motors |
| Swedish Match Ab |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
GM and Swedish Match Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Swedish Match
The main advantage of trading using opposite GM and Swedish Match positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Swedish Match 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 Swedish Match will offset losses from the drop in Swedish Match's long position.The idea behind General Motors and Swedish Match 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.| Swedish Match vs. PennantPark Investment | Swedish Match vs. Apartment Investment and | Swedish Match vs. Alternative Investment | Swedish Match vs. Southwest Gas Holdings |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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