Correlation Between GM and UniCredit SpA
Can any of the company-specific risk be diversified away by investing in both GM and UniCredit SpA 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 UniCredit SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and UniCredit SpA, you can compare the effects of market volatilities on GM and UniCredit SpA 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 UniCredit SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and UniCredit SpA.
Diversification Opportunities for GM and UniCredit SpA
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and UniCredit is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and UniCredit SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UniCredit SpA 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 UniCredit SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UniCredit SpA has no effect on the direction of GM i.e., GM and UniCredit SpA go up and down completely randomly.
Pair Corralation between GM and UniCredit SpA
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the UniCredit SpA. In addition to that, GM is 2.06 times more volatile than UniCredit SpA. It trades about -0.05 of its total potential returns per unit of risk. UniCredit SpA is currently generating about 0.5 per unit of volatility. If you would invest 16,120 in UniCredit SpA on November 3, 2024 and sell it today you would earn a total of 2,628 from holding UniCredit SpA or generate 16.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. UniCredit SpA
Performance |
| Timeline |
| General Motors |
| UniCredit SpA |
GM and UniCredit SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and UniCredit SpA
The main advantage of trading using opposite GM and UniCredit SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, UniCredit SpA 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 UniCredit SpA will offset losses from the drop in UniCredit SpA's long position.The idea behind General Motors and UniCredit SpA 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.| UniCredit SpA vs. Santander Bank Polska | UniCredit SpA vs. Bank Polska Kasa | UniCredit SpA vs. ING Bank lski | UniCredit SpA vs. mBank SA |
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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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