Correlation Between GM and Thorne HealthTech
Can any of the company-specific risk be diversified away by investing in both GM and Thorne HealthTech 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 Thorne HealthTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Thorne HealthTech, you can compare the effects of market volatilities on GM and Thorne HealthTech 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 Thorne HealthTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Thorne HealthTech.
Diversification Opportunities for GM and Thorne HealthTech
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Thorne is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Thorne HealthTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thorne HealthTech 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 Thorne HealthTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thorne HealthTech has no effect on the direction of GM i.e., GM and Thorne HealthTech go up and down completely randomly.
Pair Corralation between GM and Thorne HealthTech
If you would invest 4,287 in General Motors on August 26, 2024 and sell it today you would earn a total of 1,566 from holding General Motors or generate 36.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.79% |
| Values | Daily Returns |
General Motors vs. Thorne HealthTech
Performance |
| Timeline |
| General Motors |
| Thorne HealthTech |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Thorne HealthTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Thorne HealthTech
The main advantage of trading using opposite GM and Thorne HealthTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Thorne HealthTech 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 Thorne HealthTech will offset losses from the drop in Thorne HealthTech's long position.The idea behind General Motors and Thorne HealthTech 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.| Thorne HealthTech vs. Seneca Foods Corp | Thorne HealthTech vs. Central Garden Pet | Thorne HealthTech vs. Central Garden Pet | Thorne HealthTech vs. Natures Sunshine Products |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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