Correlation Between GM and 126650DK3
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By analyzing existing cross correlation between General Motors and CVS HEALTH P, you can compare the effects of market volatilities on GM and 126650DK3 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 126650DK3. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and 126650DK3.
Diversification Opportunities for GM and 126650DK3
Very good diversification
The 3 months correlation between GM and 126650DK3 is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and CVS HEALTH P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS HEALTH P 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 126650DK3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS HEALTH P has no effect on the direction of GM i.e., GM and 126650DK3 go up and down completely randomly.
Pair Corralation between GM and 126650DK3
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.1 times more return on investment than 126650DK3. However, GM is 1.1 times more volatile than CVS HEALTH P. It trades about 0.12 of its potential returns per unit of risk. CVS HEALTH P is currently generating about 0.0 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 362.00 from holding General Motors or generate 6.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
General Motors vs. CVS HEALTH P
Performance |
| Timeline |
| General Motors |
| CVS HEALTH P |
GM and 126650DK3 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and 126650DK3
The main advantage of trading using opposite GM and 126650DK3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, 126650DK3 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 126650DK3 will offset losses from the drop in 126650DK3's long position.The idea behind General Motors and CVS HEALTH P 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.| 126650DK3 vs. Hafnia Limited | 126650DK3 vs. Origin Materials | 126650DK3 vs. Ecovyst | 126650DK3 vs. Avient 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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