Correlation Between GM and Titanium Transportation
Can any of the company-specific risk be diversified away by investing in both GM and Titanium Transportation 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 Titanium Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Titanium Transportation Group, you can compare the effects of market volatilities on GM and Titanium Transportation 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 Titanium Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Titanium Transportation.
Diversification Opportunities for GM and Titanium Transportation
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GM and Titanium is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Titanium Transportation Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titanium Transportation 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 Titanium Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titanium Transportation has no effect on the direction of GM i.e., GM and Titanium Transportation go up and down completely randomly.
Pair Corralation between GM and Titanium Transportation
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.03 times more return on investment than Titanium Transportation. However, GM is 1.03 times more volatile than Titanium Transportation Group. It trades about 0.1 of its potential returns per unit of risk. Titanium Transportation Group is currently generating about 0.01 per unit of risk. If you would invest 3,273 in General Motors on October 27, 2024 and sell it today you would earn a total of 2,118 from holding General Motors or generate 64.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.65% |
| Values | Daily Returns |
General Motors vs. Titanium Transportation Group
Performance |
| Timeline |
| General Motors |
| Titanium Transportation |
GM and Titanium Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Titanium Transportation
The main advantage of trading using opposite GM and Titanium Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Titanium Transportation 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 Titanium Transportation will offset losses from the drop in Titanium Transportation's long position.The idea behind General Motors and Titanium Transportation Group 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.| Titanium Transportation vs. Hammond Power Solutions | Titanium Transportation vs. Supremex | Titanium Transportation vs. Redishred Capital Corp | Titanium Transportation vs. Atlas Engineered 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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