Correlation Between GM and Seychelle Environmtl
Can any of the company-specific risk be diversified away by investing in both GM and Seychelle Environmtl 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 Seychelle Environmtl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Seychelle Environmtl, you can compare the effects of market volatilities on GM and Seychelle Environmtl 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 Seychelle Environmtl. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Seychelle Environmtl.
Diversification Opportunities for GM and Seychelle Environmtl
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Seychelle is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Seychelle Environmtl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seychelle Environmtl 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 Seychelle Environmtl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seychelle Environmtl has no effect on the direction of GM i.e., GM and Seychelle Environmtl go up and down completely randomly.
Pair Corralation between GM and Seychelle Environmtl
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.29 times more return on investment than Seychelle Environmtl. However, General Motors is 3.48 times less risky than Seychelle Environmtl. It trades about 0.32 of its potential returns per unit of risk. Seychelle Environmtl is currently generating about -0.3 per unit of risk. If you would invest 5,273 in General Motors on August 27, 2024 and sell it today you would earn a total of 747.00 from holding General Motors or generate 14.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Seychelle Environmtl
Performance |
| Timeline |
| General Motors |
| Seychelle Environmtl |
GM and Seychelle Environmtl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Seychelle Environmtl
The main advantage of trading using opposite GM and Seychelle Environmtl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Seychelle Environmtl 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 Seychelle Environmtl will offset losses from the drop in Seychelle Environmtl's long position.The idea behind General Motors and Seychelle Environmtl 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.| Seychelle Environmtl vs. TOMI Environmental Solutions | Seychelle Environmtl vs. Zurn Elkay Water | Seychelle Environmtl vs. Federal Signal | Seychelle Environmtl vs. Energy Recovery |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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