Correlation Between GM and 189054AZ2
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By analyzing existing cross correlation between General Motors and CLX 46 01 MAY 32, you can compare the effects of market volatilities on GM and 189054AZ2 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 189054AZ2. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and 189054AZ2.
Diversification Opportunities for GM and 189054AZ2
Excellent diversification
The 3 months correlation between GM and 189054AZ2 is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and CLX 46 01 MAY 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLX 46 01 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 189054AZ2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLX 46 01 has no effect on the direction of GM i.e., GM and 189054AZ2 go up and down completely randomly.
Pair Corralation between GM and 189054AZ2
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.58 times more return on investment than 189054AZ2. However, GM is 2.58 times more volatile than CLX 46 01 MAY 32. It trades about 0.05 of its potential returns per unit of risk. CLX 46 01 MAY 32 is currently generating about -0.02 per unit of risk. If you would invest 3,778 in General Motors on September 2, 2024 and sell it today you would earn a total of 1,781 from holding General Motors or generate 47.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 93.35% |
| Values | Daily Returns |
General Motors vs. CLX 46 01 MAY 32
Performance |
| Timeline |
| General Motors |
| CLX 46 01 |
GM and 189054AZ2 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and 189054AZ2
The main advantage of trading using opposite GM and 189054AZ2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, 189054AZ2 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 189054AZ2 will offset losses from the drop in 189054AZ2's long position.The idea behind General Motors and CLX 46 01 MAY 32 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.| 189054AZ2 vs. Anheuser Busch Inbev | 189054AZ2 vs. Ambev SA ADR | 189054AZ2 vs. Scandinavian Tobacco Group | 189054AZ2 vs. Japan Tobacco ADR |
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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