Correlation Between GM and 207597EH4
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By analyzing existing cross correlation between General Motors and CONNECTICUT LT PWR, you can compare the effects of market volatilities on GM and 207597EH4 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 207597EH4. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and 207597EH4.
Diversification Opportunities for GM and 207597EH4
Weak diversification
The 3 months correlation between GM and 207597EH4 is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and CONNECTICUT LT PWR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONNECTICUT LT PWR 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 207597EH4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONNECTICUT LT PWR has no effect on the direction of GM i.e., GM and 207597EH4 go up and down completely randomly.
Pair Corralation between GM and 207597EH4
Allowing for the 90-day total investment horizon General Motors is expected to generate 1.42 times more return on investment than 207597EH4. However, GM is 1.42 times more volatile than CONNECTICUT LT PWR. It trades about 0.08 of its potential returns per unit of risk. CONNECTICUT LT PWR is currently generating about 0.01 per unit of risk. If you would invest 4,551 in General Motors on September 1, 2024 and sell it today you would earn a total of 1,008 from holding General Motors or generate 22.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 40.48% |
| Values | Daily Returns |
General Motors vs. CONNECTICUT LT PWR
Performance |
| Timeline |
| General Motors |
| CONNECTICUT LT PWR |
GM and 207597EH4 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and 207597EH4
The main advantage of trading using opposite GM and 207597EH4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, 207597EH4 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 207597EH4 will offset losses from the drop in 207597EH4's long position.The idea behind General Motors and CONNECTICUT LT PWR 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.| 207597EH4 vs. Direct Line Insurance | 207597EH4 vs. Assurant | 207597EH4 vs. Employers Holdings | 207597EH4 vs. QBE Insurance Group |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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