Correlation Between GM and AMERICAN
Specify exactly 2 symbols:
By analyzing existing cross correlation between General Motors and AMERICAN HOMES 4, you can compare the effects of market volatilities on GM and AMERICAN 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 AMERICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and AMERICAN.
Diversification Opportunities for GM and AMERICAN
Excellent diversification
The 3 months correlation between GM and AMERICAN is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and AMERICAN HOMES 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMERICAN HOMES 4 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 AMERICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERICAN HOMES 4 has no effect on the direction of GM i.e., GM and AMERICAN go up and down completely randomly.
Pair Corralation between GM and AMERICAN
Allowing for the 90-day total investment horizon General Motors is expected to generate 4.07 times more return on investment than AMERICAN. However, GM is 4.07 times more volatile than AMERICAN HOMES 4. It trades about 0.17 of its potential returns per unit of risk. AMERICAN HOMES 4 is currently generating about -0.13 per unit of risk. If you would invest 5,076 in General Motors on September 1, 2024 and sell it today you would earn a total of 483.00 from holding General Motors or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
General Motors vs. AMERICAN HOMES 4
Performance |
| Timeline |
| General Motors |
| AMERICAN HOMES 4 |
GM and AMERICAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and AMERICAN
The main advantage of trading using opposite GM and AMERICAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, AMERICAN 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 AMERICAN will offset losses from the drop in AMERICAN's long position.The idea behind General Motors and AMERICAN HOMES 4 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.| AMERICAN vs. AEP TEX INC | AMERICAN vs. US BANK NATIONAL | AMERICAN vs. American Express | AMERICAN vs. Chevron Corp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |