Correlation Between GM and Thermador Groupe
Can any of the company-specific risk be diversified away by investing in both GM and Thermador Groupe 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 Thermador Groupe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Thermador Groupe SA, you can compare the effects of market volatilities on GM and Thermador Groupe 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 Thermador Groupe. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Thermador Groupe.
Diversification Opportunities for GM and Thermador Groupe
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Thermador is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Thermador Groupe SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermador Groupe 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 Thermador Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermador Groupe has no effect on the direction of GM i.e., GM and Thermador Groupe go up and down completely randomly.
Pair Corralation between GM and Thermador Groupe
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.55 times more return on investment than Thermador Groupe. However, GM is 1.55 times more volatile than Thermador Groupe SA. It trades about 0.16 of its potential returns per unit of risk. Thermador Groupe SA is currently generating about -0.1 per unit of risk. If you would invest 4,893 in General Motors on August 28, 2024 and sell it today you would earn a total of 1,127 from holding General Motors or generate 23.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
General Motors vs. Thermador Groupe SA
Performance |
| Timeline |
| General Motors |
| Thermador Groupe |
GM and Thermador Groupe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Thermador Groupe
The main advantage of trading using opposite GM and Thermador Groupe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Thermador Groupe 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 Thermador Groupe will offset losses from the drop in Thermador Groupe's long position.The idea behind General Motors and Thermador Groupe SA 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.| Thermador Groupe vs. Stef SA | Thermador Groupe vs. Robertet SA | Thermador Groupe vs. Grard Perrier Industrie | Thermador Groupe vs. Aubay Socit Anonyme |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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