Correlation Between GM and ASHTEAD
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By analyzing existing cross correlation between General Motors and ASHTEAD CAP INC, you can compare the effects of market volatilities on GM and ASHTEAD 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 ASHTEAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and ASHTEAD.
Diversification Opportunities for GM and ASHTEAD
Average diversification
The 3 months correlation between GM and ASHTEAD is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and ASHTEAD CAP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASHTEAD CAP INC 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 ASHTEAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASHTEAD CAP INC has no effect on the direction of GM i.e., GM and ASHTEAD go up and down completely randomly.
Pair Corralation between GM and ASHTEAD
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.55 times more return on investment than ASHTEAD. However, GM is 2.55 times more volatile than ASHTEAD CAP INC. It trades about 0.12 of its potential returns per unit of risk. ASHTEAD CAP INC is currently generating about -0.26 per unit of risk. If you would invest 5,197 in General Motors on August 31, 2024 and sell it today you would earn a total of 353.00 from holding General Motors or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 68.18% |
| Values | Daily Returns |
General Motors vs. ASHTEAD CAP INC
Performance |
| Timeline |
| General Motors |
| ASHTEAD CAP INC |
GM and ASHTEAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and ASHTEAD
The main advantage of trading using opposite GM and ASHTEAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, ASHTEAD 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 ASHTEAD will offset losses from the drop in ASHTEAD's long position.The idea behind General Motors and ASHTEAD CAP INC 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.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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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